Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1910-02-04

Of the exchange In accordance with
what they find to be the ruling market
prices on the sixth day prior to deliv-
cry.
The method Of determining the diff
ferences in grades according to market
prices is peculiar to the New Orleans
Cotton Exchange and is termed the
Commercial difference" system, as OPP
posed to the fixed difference" system
in vogue on the New York Cotton E1-
change, under the rules Of which latter
institution the prices for the several
grades are established for the whole
season at stated intervals twice year.
Advocates Of the commercial difference
system contend that It Is the more
equitable in that It tends to preserve
parity or equivalent value between
futures and spot cotton, and in 80 do
ing increases the usefulness of futures
as a hedge and prevents their use for
certain manipulative purposes.
The exchange provides types" or
standards for the grades, which are
kept In the custody Of the "classers."
These are experts in its employ who
have no interest In cotton other than
to Judge and decide upon the grade Of
every bale delivered on contract.
A method has been devised for Ia
cilitating deliveries by "certiicationr Of
the bales. Thus, II merchant has,
say, 100 bales Of cotton which he wish
es to deliver on future contract he I.
may request the exchange, through its
classers, to pass upon the grades be-
fore the actual delivery. The certifi-
cate which ne receives is good for one
year and carries with II guaranty
from the exchange that the cotton IL
Of the grade mentioned.
When the day for delivery arrives the
owner merely tenders this certificate,
together with his warehouse or press
receipts, additions and deductions be-
ing made on the. then existing difEer-
ences, al the delivery. .is complete but
the cotton must be turned out and
weighed unless the parties agree ON
weights and waive the manual trans
fer. A buyer who thus comes into pos
session Of a certificate may redeliver
1t to the party to whom he has sold
the cotton, and 90. on during the life Of
the certificate.
The future contract has a history Jf
Its own so closely identified with the
growth Of the New Orleans Cotton Ex-
change and the development OF the cot
ton business that its origin and effects
cannot fail to prove Of interest to the
student Of economic history.
4 Before the days Of the Atlantic cable
the consumers, who were then almost
only the English and Continental mills,
bought their cotton as they needed It
through their correspondents or agents
located at central points throughout
the cotton belt, or else they were conn
PEELED to accumulate q large stock OF
raw cotton and manufactured goods.
In this latter case immense capital
was needed. and they were assuming
decided risks, for the value Of the sta
pie was as variable then. II not more
variable than at the present time. But
with quickened facilities Of communi-
cation there arose the desire to fcrmu-
late some means by which they could
be assured Of acquiring their supplies
as they needed them, at determined
prices, thereby allowing them to con-
tract for delivery Of the finished ar
ticle months In advance and at the
same time fixing certain and legiti-
mate margin Of profit To I'LL this
want the future contract was devised.
and in the course Of time has crystal
lized into the form now In use.