The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1910-04-02
GAMBLING ON EXCHANGES.
Abstract Of an Address Deliver
ed by President w. b. Thompson of
The New Orleans Cotton Exchange,
Before the Republican Club of the
City Of New York.


dress before the Republican Club of
the city of New York here Saturday
afternoon, President w. B. Thomp-
son Of the New Orleans Cotton Ex-
change declared there were economic
reasons necesstating speculative ex-
changes. At the same time he admit
ted certain ethical evils of the system
as in certain instances operated, and
pointed out methods whereby he be-
lieved these evils could be eliminated.
While Mr.. Thompson's discussion of
the question was directed chiefly to-
wards cotton exchanges, he expressed
the opinion that the fundamental
principles underlying all speculative
organizations were essentially the
same.
The increase of the production and
consumption of cotton, the growth of
the spinning industry, the widening of
the scope and added complexity of
the trade were causes, Mr.. Thompson
said. which led to the necessity for a
system embodying more than social
ed "spot trading" and resulted in the
inauguration Of future selling and
purchasing contracts.
I'VE find in the modern future
market that the contracts are primar-
lily issued or sold by those merchants
who have cotton in hand, or who ex-
pect presently to have it in hand"
said Mr.. Thompson, land by those
traders who believe that the present
price is better than the future price
will be. and that by selling now and
Duying later to fulfill or cancel their
obligations, they will make a profit
able transaction. We find that the
Contracts are bought primarily by
those merchants who have no cotton
in hand, but who will require cotton
at some future time, in order that
they may fulfill engagements they
have made to deliver cotton or cotton
goods. and by those traders who be-
lieve that the present price is lower
than the future price will be and
that by buying contracts now they
can sell later at a profit.
Herein lies probably the most i'm
portant benefit of the future market,
namely the hedging facility. Hedging
bears the same relation to the cotton
trade that general insurance bears to
general business. If future trading
was abolished, the protection afforded
by the hedging process would be
withdrawn, and If this protection was
denied, the cotton trader, the cotton
trade and the product itself would
suffer the same in essence, differing
only in extent and degree, what the
general business man, business and
all heretofore insurance commodities
and things would suffer, if suddenly
all underwriters were prohibited from
issuing policies of insurance"
In taking up ethical evils of the
speculative exchanges" the speaker
declared: "The obvious and vital
abuses of speculation are compre-
hended under three general heads
excessive speculation, manipulation
and growing out of the latter, a dep
reciated contract. A prolific cause of
excessive speculation, he asserted, "is
an exchange which is essentially spec
ulative and which as an organization
or an aggregation of individuals is
profited by such excessive specula-
tion."
Manipulation" he said, "en-
abled the professional operator to
profit unfairly at the expense of the
general trader. The Deprecated
Contract not only worked an injury
to the trader who is using the con-
tract in good faith and for legitimate
purposes, but is a disturbing element
in the spot trade and depresses the
value of the commodity for which
the contract is alleged to stand"
In alluding to "bucket shops"
which he said We're often mistaken
ly associated with speculative ex-
changes, Mr.. Thompson said there
was no relationship between the two
except that the bucket shop steals
M hot e
actual trades posted by the exchanges.
THE evils can and must be eradi-
Gated" he declared. The first step
in the remedial endeavor is to bring
the exchanges to just appreciation
of their responsibility and obligation
TO the public and the second step is
to compel fair response TO this re-
sponsibility, and this obligation.