Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1913-12-16

upon which 1t is based. The econom-
ic principle or law which comes into
play here can be expressed as fol-
lows: ALL SPECULATIVE TRADES
MUST HAVE AND MAINTAIN A
COMMON BASIS OF ACTUAL SUP
PLIES. 1t is the categorical impera-
tive Of speculative trading. II Is the
one law, which II observed, will rem
der speculative transactions In staples
useful, beneficial and harmless; II dis
regarded, the results are bound to be
disastrous. The present method Of
speculative trading has degenerated
into a 3, stem Of exploitation, costing
our farmers in direct and indirect ways
losses annually Of many hundreds of
millions of dollars, which Is the more
remarkable since the growing Of cot
ton is natural monopoly Of the
south. II selling agency can not pro-
duce> any better results than that II
ought to be closed up. Bat, 1t is per-
haps the better policy to give the cot
ton exchanges one more chance to
reform and improve their methods of
trading, and to show them that they
can make money in the long run by
giving proper support to great sta
pie than in exploiting il By unfair
methods. How can the necessary i'm
provements be brought about? We
have already succeeded In getting the
exchanges to adopt the government
system of uniform grades II the state
warehouse bill becomes law we have
the machinery for establishing a cor
rect basis Of actual supply. which viii
compel all speculative trades to give
cooperative support to the actual
supplies The cotton exchanges could
CO. operate with the state warehouse.
and they seem willing to do 80. and II
they do not Federal law can compel
deliveries to be made In the states
where cotton Is produced by taxing all
deliveries to be made In non cotton
states. The law would Of course have
to apply to wheat, corn and other sta
faces similar conditions In the wheat
pit. Here Is what might be done, say
that the stock Of cotton is 100000
bales, and the price 15 cents, making
a total value of s37.50o. 900. Suppose
we allow 10 per cent for interest, stor-
age and insurance, these charges
would amount to s3,75e,000 per year,
or s312,5o0 per month. or 62s cents per
bale per month. If we further assume
that the daily volume Of trades, both
spot and speculative In all the mar
kets Of the country Is 100000 bales.
and allowing Is trading days per
month. the total per month would be
12,500.000 bales. Now IL charge Of
"a cents per bale were made on all
these trades. It would amount to s312,-
500, just enough to cover the actual
carrying charges. But the charge
could even be made cents per bale
without the least Inconvenience to the
short seller in the speculative market
With this money the New York cot
ton exchange could say to the owners
Of warehoused cotton: Let US use
your cotton as a basis for our specu-
lative trades, and in consideration Of
that use we VIII pay the carrying
charge. We will do this for three
months, in which time. you viii be
able to find consumer for 1t. We will
register your cotton on our visible
supply book and designate your state
warehouse as the place where It Is
stored When you withdraw 1t for
shipment or consumption, bring US
your proofs Of interest and storage
charges and we will refund your mon
ey out Of that we have collected on
on our speculative sales. BY selling an
option in our exchange you can, II you
wish, insure your cotton against a
declination in price, and this contract
will be protected by proper margins
deposited. in our clearing house. II you
wish to borrow money, you have your
warehouse receipt and certificate Of
grades upon which our banks will
loan you within 20 per cent Of the
value of your cotton" The individual
members of the exchange would be
relieved Of the enormous money It
takes to carry spot cotton, while the
farmer could market his cotton grad
ually and the speculator pay his share
Of the carrying charges. Think Of
100000 bales Of actual cotton carry
ing 12,500.000 bales of imaginary cot
ton The system Is monstrous and
once congress understands the matter
It will stop.
A base of actual supply for specu-
lative trading is as necessary as a
sound basis is for the issue Of pa
per currency.
Political economy is a dry subject,
but II we are going to accomplish any
thing we must start on fundamental
principles. What I have said about
cotton applies to wheat, corn. meat
and flour. Let congress quit the "hot
air" business and say here, If you
wish to speculate. 1t must be upon a
basis of actual supplies and your
speculative trades must share in the
expense of carrying those supplies
You shall not do business on any 9TH
er basis, because II is as much gambl-
ing as playing the ponies"
Respectfully,