The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1910-01-02
COTTON HIGHEST
At NEW ORLEANS
Reason Is That Prices Reflect
Actua! Value of Staple
DEMAND EXCEEDS SUPPLY
Conditions in the South and in Cotton
Manufacturing World Are Such
That Prices Have Reached
High Record Figures.
DEMAND EXCEEDS SUPPL Y
BY WALTER PARKER,

New Orleans, January 1.-Despite many
handicaps that have been placed on
the producers cotton market in the south
New Orleans contract quotations have
consistently maintained the highest lev
els In America and relative. the high
est In the world and just before the
turn of the new year II cents per pound
for middling cotton deliverable I'm July
next was recorded on the boards of the
New Orleans cotton exchange. Since all
such quotations are merely the actual
prices paid for enforceable contracts each
calling for the delivery of 5000 pounds
approximately 100 bales) or more, they
mean that a man owning 100 bales of
tenderable cotton may at New Orleans
sell a July contract against It at the
market price, store the cotton. deliver
1t In July and thereby cotain the full
benefit of the highest price on the board
In 1872 middling sold fer 81 cents a pound
Students of the market believe the pros
pective relative scarcity of supplies Is
greater now than 1t was then. On the
New Orleans contract any grade be-
tween good ordinary and fair may be
ferences above or below middling, and
under conditions approved by the fed
eral government as being fair. and just.
Thus on the upward trend of prices
spot owners are constantly afforded ample
means of protection and at any time
may avail themselves of the highest
prices on the board 1t its the proximity
of such security that. in the end, pro-
notes confidence in the stability of prices
and in coming developments.
In some southern states the commercial
process of protecting the direct inter-
ests of the owner of actual cotton by
hedging has been made difficult by leg
islative enactment, but in others, notably
in Tennessee and Louisiana, the freedom
of contract is being taken advantage of
generally. In a number of cases Mis-
sissippi farmers have come to New Or
leans for this purpose in order to avoid
the handicaps Of the Mississippi law,
which is known as the Boddie law.
One Farmers Experience.
One Mississippi farmer. when the price
of cotton was low in January, 1909. aban-
doned cotton planting altogether, came to
New Orleans, reversed the hedging pro-
cess, bought future contracts to the ex-
tent of his average crop, and recently
when the cotton called for under his
contracts was delivered to him he found
that his net profit amounted to $3.50
per bale. He had purchased these con-
tracts from spectators in Liverpool who
a few days ago were forced to pay farm
ers the present day high market price
for the cotton they had to deliver to
him.
This cotton planter is well known in
Mississippi. OF his experience he says:
with the boil weevil staring me in the
face, did not care to plant cotton at 81
cents a pound. New York and Liverpool
spectators thought that a high enough
price. New Orleans spectators thought
It was not half enough. believed as the
New Orleans spectators believed, and
learning they were determined to help the
farmers fight for high prices, 1 Joined the
procession, bought contracts calling for
the delivery of actual cotton In January,
1910. waited for delivery day to come. and
then called on tho bear spectators or
spinners as the case might be to give me
the cotton They had to buy 1t from some
farmer and pay the price that farmer de-
manded. The profit / have made comes
out Of the pockets of the bar Spectator
since the price he pe-d the farmer was
practically the prize / obtained for the
cotton when lesold it.
Now that high prices for cotton have
been ests Jffshed, and a safe profit as
sured tie cotton planter another year
new crop deliveries are above II cents
J shall go back to planting cotton as
business"
The experience Of this farmer is not
unique, because others have done the
same thing this season.
The question is often asked why the
New Orleans quotations are nowadays
higher than corresponding quotations at
Liverpool, The answer il this:
Future quotations should truly reflect
first, the value of mfddfing cotton at the
point of delivery, less the cost Of deliv-
cry: next. carrying charges and such in
fluences affecting supply and require
ment as may be known to farmer, mer-
chant and consumer in advance of de-
livery month.
Big Operators at Work.
Beginning about year ago the cotton
trade at New Orleans learned that a
short crop and large requirement were
probable. Later this probability became
certainty In the minds Of such men as
Frank B. Hayne, w. p. Brown, E. g.
5CdiCo dHu mcdilWullC, tiC gull
mercial contract In use at New Orleans
gave buyer and seller, tenderer and re-
ceiver of cotton equal advantage, which
the fixed difference" contract at New
York does net give, and the full effect
of speculative buying as led by these adj
vocates Of high prices was felt at New
Orleans but not at New York. Liverpool
being a spinners' market, quite natural
ly opposed the great advance in the
south, consequently the New Orleans
market climbed higher more rapidly and
held its advances with greater firmness
and consistency than did either New York
or Liverpool, and thereby ultimately set
the high pace the others are now follow
Ing.
But it Is mistake 70 imagine that the
high worth of cotton today has been ac-
tually created by the southern market
leaders. This value exists because con-
ditions of supply and requirement war;