The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1911-05-19

lesser answcrSito the spinners' contcn
lions is he fact that the cotton eX-
changes. through their future con
tracts. are markets for cotton in gross,
just as IL is produced and sold by
the producer. and not markets FORGOT
ton sorted out and made immed.a ely
availa bic for the varying requirements
of individual spinners. They are great
reservoirs into which through hedge.
sales for future delivery the great
food OF all Kinds of cotton is poured
to be drawn out by the merchants
who use them according as tho vary-
ing requirements Of their business de-
mand
Not in Hnrmon,.
Nor is il in harmony with the vervi
idea of their being that they
should be used ~. any other.
way than MS cotton merchants
use them. buying and selling IN them
in gross, and then performing their
merchandising function OF asserting
and distributing as their trade re-
CURES This being SO, the only proper
theory OF the rationale of the price
OF contracts in these markets is that
this price reflects the current value OF
cotton in gross. and not the value of
any particular grade or grades
Inc fact that the exchange contract
Is known as n basis middliny" CON
tract means to the cotton merchant
nothing more than that middling cot
ton is TO bc taken as the startiinS
point in calculating the value of any
given lot Of cotton. when 1t changes
hands in the market Ii ccrtainlv dos
not mean that the price of CONTRACTS
Is. or ought TO lie. the current price
Tor middling cotton The cotton mer-
chant understands perfectly that con-
ditlons may arise and constantly lie
arise that give to this or that grade
OF cotton Il particular and unusual
value and that this may he true or
middiing as Well as OF any other.
Erane. When this occurs, 1t is certain
mat the current price of middlinr will
Increase as compared with .hp prire or
cotton In gross. and there is nothing
uneconomic or contrary TO just prin.
clples OF trade in its doing so The
intelligent cotton merchant is always
prepared for having it do so. and takes
account OF the possibility in his mer-
chandising. Thus In the Liverpool
ma rket to-day the price of middiiny
cotton is so Liverpool points. or 81
pale, above the price of cotton i'm
gross, as shown by the quotations fn~
futures. and this in spite of the pros
cnce In that market OF many hundreds
OF thousands of bales OF cotton Mid
olnS cotton has become scarce there
ana Is much In demand, and this fact
IS indicated by the price. The spinner.
ihen' who quarrels with these phenom
ena simply shows that his point OF
view is not that OF the cotton mer-
chant. But why should the spinners.
point of view be adopted by the OK
changes. when they exist for the use
of merchants?
High Speculation.
of the spinners, that excuses of spec
ulation are permitted on the exchanges
which seriously and fundamentally
disturb the conduct OF their business
there is. in my opinion, al things ar.
to-day, much more 10 be said in its
justification.
Ordinary speculation. all economists
are agreed, can work no real Injustice
TO nybody, because. to be success full
1t must be founded upon sound judy
ment of the true underlying conditions 4
and it is to everybodys ultimate ad
vantage to have these conditions made
effective in the market for any COM
modify as quickly as possible. On
the other hand. ordinary speculation
based upon wrong Interpretation of
conditions always fails and produces
no permanent effect upon the market 4
But 4 do not think IL can be denied
that In recent years there has been
form of speculation in cotton which
DIFFERS radically from ordinary com
peitive speculation. and has producetii
disturbing effects that may be rightly
objected TO. This speculate 10 which
] refer is based, not upon obtaining /.
part of the profit OF the rcadjustmen.
OF the commodity TO new conditions
OF demand and supply, but upon takin.
violent advantage of the technical
procedure of merchants In the eN-
changes In the matter of hedges
forcing arbitrary settlements from
these unfortunate merchants on their
hedge contracts. irrespective of the
general economic conditions
Hedge Contracts.
We had q good Illustration Of this
obnoxious form of speculation in the
New York Cotton Exchange las; sum
mer. when SPECTATORS acquired such
vast quantities OF hedge" contracts
that they We're enabled TO force set
Elements on considerable part Of
them at prices which can only be
called eXtortionate in view Of the fact
that these same spectators were
freely selling actual cotton that had
been delivered to them ut or cents
pound less than they cxacted for
the settlement of the contracts do
ny tHiHh any SHt-tntnklnS ina can
apply TO such operations any other
terms than uncommercial and even i'm
moral. That they run counter 10 the
long and deep legal tradition OF the
English race is certain; and it is prob
able that they are in direct violation
OF the statutory law Of the land. II
goes without saying that they are
regarded with abhorrcncc by the rep
utable cotton merchants who form the
bulk of the membership of Tie ex.
changes.
II the exchanges had the requisite
machinery for investigation and prose
cution there can be no doubt that n
stop would speedily be put TO them.
Even as II is. the New York Cotton lIx-
change has. BY an almost unanimous
vote of meeting OF its members, set
about the task Of Incorporating speci-
hcaliy In its bylaws the principles OF
g..