Atlanta Georgian. [volume] (Atlanta, Ga.) 1912-1939, 1913-09-26
ATLANTA COTTON MEN
FAVOR SENATOR SMITHS
PLAN FOR FUTURES TAX

Cotton merchants in Atlanta are a
unit in opposing the Clarke amend
ment to the tariff bill, which now is
being considered by the House and
Senate conferees. The Clarke amend
ment proposes a prohibitive tax on
trading in cotton futures.
senator Hoke Smith, of Georgia,
has a substitute which he is urging
upon the conferees. Atlanta cotton
men are inclined to favor it, though
few Of thell have had the opportuni-
ty to inspect its exact phrasing.
The Clarke amendment, say the
Atlantans, would wipe out the New
York and New Orleans exchanges:
depress the price Of cotton; make
buying and selling of spots and even
spinning extremely precarious, and
result in a narrow market and low
return for the farmer.
Even the shadow that the threat of
its passage has thrown across the
trade, they say, is restricting business
in Atlanta.
Would Kill Hedge" Markets.
Cotton mills here and elsewhere
have habit Of buying certain grades,
L fixing the price. but agreeing 10
pay certain prem m over the New
York futures quotation at cali date.
Fear that the cotton exchanges may
be pu. out of business is causing local
cotton merchants to refuse such bus!-
ness daily.
IF the Clarke amendment becomes
law, it will destroy our hedge mar
kets," says c. B. Toward, of the firm
of Inman, Akers & Inman. TT even
makes it illegal for us TO cable buying
and selling orders to the Liverpool
Exchange.
IF hedge markets are destroyed.
the cotton ---erchant, the mill man
and every other man connected with
the marketing of the cotton crop must
make a greater gross profit to insure
himself against fluctuations, an insur-
ance he now gets by buying or selling
futures. This spells but one thing
buy cheaper from the grower and sell
dearer to the consumer.
Unfortunately future trading is a
bit complicated. 1t takes a little study
TO understand 1t. l can see how sorue
men. failing to grasp the principle,
become rabid against the exchanges.
No doubt there faults in the
present system Of marketing cotton.
There are faults in every business OF
which l ever heard. But the faults
are small compared with the great
benefits. The system has made it pos
sible to do cotton trading, the buying
and selling of actual cotton, or the
purchase and sale of cotton cloths or
yarns on a smaller margin than OBJ
tains in any other line of commerce.
Now a farmer who sees futures
at an attractive price in New Yorh,
and who fears that the rush Of the
crop to market in the height of the
ginning season will depress the price
can sell his cotton to the merchant
in August. to be delivered in October.
! can buy 1t and insure myself against
loss by selling a New York contract.
How Broker Operates.
When he has picked his cotton
and delivered it to me, and l have
sold it to a spinner, then l can close
my New York contract. II cotton las
gone down, what l have lost in pay
ing the high price to the farmer
have made on my contract. If ii goes
up, what l have made on the cotton
is offset by what l have lost on the
contract.
And who bought the contract
sold in New York? Probably a mill
man who made contract that day 20
deliver a huge amount of cotton cloth
at a certain price. The loss he suffets
If he has to pay more for the actual
cotton he spins is made up by what
he made in the rise of futures In New
York"
Mr.. Howard favors the use of conf
mercial differences in settling New
York contracts as against the arDi-
trary differ nnces now fixed by the OK
change This is technical point