Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1910-02-04
WHERE COTTON IS KING.
Methods of Trading on the New
Orleans EXCHANGE.

Il
Methods Of Trading on the New
Orleans Exchange.
For many generations New Orleans,
both as port and as factor In de-
termining prices, has been more close
ly identified with cotton growing than
any other city in the world.
II in later years the development Of
railroad systems has drawn away from
this port portion Of the cotton trade
which in the era Of river traffic was
the city's natural right, New Orleans is
nevertheless a dominant factor In cot
ton trading, says Moody's Magazine,
and its importance is due chiefly to its
cotton exchange and to certain unique
features in its methods.
In the year 1871, when the south was
lifting itself out Of the wreck Of war
and reconstruction, the value Of an or
ganization for their mutual protection
and benefit became apparent to some
Of the leading merchants, and on June
II, 1871, meeting Of thirty-six cotton
firms was called to consider the needs
Of the situation.
On July "a Of that year these men
adopted a constitution and were duly
chartered under the name Of the New
Orleans Cotton Exchange. The pres
ent building was erected in the year
1883 at cost Of s35O.O0o to its MEM
bers. It Is situated in Carondelet
street, the Wall street Of New Orleans.
Membership at the present day is
constituted chiefly of several more or
less well defined classes Of cotton mer-
chants; namely, the factors. buyers.
| +. o. b. sellers, exporters and future
brokers, besides a number Of freight
agents and cottonseed oil merchants,
and some farmers and mill owners.
The exporters form the largest class
Of spot cotton merchants. They oc-
casionally buy on direct orders from
the European mills, but as rule their
business is done by cable offers from
the mills or their agents, which orders
are usually good for the day.
Offers from the mills are accepted by
the exporters when they are able to
buy the cotton at prices which will net
them a fair commission, after the ad-
dition Of all expenses necessary to
complete the shipment. When the
mills do not appear anxious to buy, the
exporter takes the initiative by max
ing firm offers to the other side, reg
ulating his price on market quotations
as explained.
The contract Of the (. o. b. trader is
to deliver the cotton free on board at
New Orleans alongside the outgoing
vessel The consideration Is usually
fixed at so many points or or "on"
(that is, more than" or less than"),
the price Of some future month; this
permits the buyer to protect himself by
a hedge"
more into prominence as that method Of
trading gains favor, for 1t avoids ware
house and other charges incident to
consignment sales and give the pur-
chasers better opportunity of acquir-
ing large lots of even running grades.
The factor is in reality a Commission
merchant. who receives cotton on con-
signment for the producer and small
country merchant, to be disposed of at
stated or current prices. He acts to
some extent in a banking capacity,
making advances to mis- constituents
Of the capital needed to bring the crop
to maturity, being usually secured by
a crop lien;" in this capacity he is be-
ing superseded by the country store
keeper and interior banks.
It may be noted here as matter Of
interest that every bale Of cotton which
enters the port of New Orleans comes
Immediately under the supervision and
protection Of the cotton exchange and
remains under its constant espionage
until finally delivered to the steamship
or railroad companies for export or
transportation to domestic mills.
The committee Of the exchange which
has charge of this is known as the
committee on supervision and inspec-
ton" 1t employs small army Of dep
uties, whose duties are to prevent the
stealing of the bales Of cotton or the
pilfering Of samples, bleeding Of the
bale, as 1t is called.
Before the institution Of this COM
mittee 1t was considered customary for
a bale to lose from ten to twenty
pounds while in presses or warehouses,
for from the nature of its packing the
cotton bale is easily susceptible Of
having this amount extracted without
altering its outward appearance.
Some samplers and classers in those
days gained a lucrative IL dishonest
livelihood by removing unreasonably
large samples under the pretence Of ex-
animation, and accommodating them In
their offices. Now, however, the in
spectors do not allow sampler to have
more than six ounces, thus protecting
the interest Of the owner.
The contract of future delivery as
traded in on the New Orleans Cotton
Exchange is an agreement on the part
Of the seller to deliver and Of the buyer
to receive at some future date, usually
in some distant month $4,000 pounds OF
cotton, basis middling, in about 100
square bales, the purchase price being
fixed at the time that the contract Is
entered into. It is an option" only In
the sense that the seller has the priv
ilege Of delivering the cotton on any
day that he chooses during the month
in which delivery must be made.
This does not mean that in every
case physical delivery is required. AS
with executory contracts in general,
rights and liabilities arising from them
may be assigned, and they are fire.
quently so assigned. If it is more con-
venient for the seller in a contract to
pay in cash the difference accruing
from an advance in values, thereby en-
abling the buyer to purchase his cot
ton, 1t would be useless act to COM
mel actual delivery