Atlanta Georgian. [volume] (Atlanta, Ga.) 1912-1939, 1913-09-26
ALLAN IA 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 conrerees. 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-
~ 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 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,
80 fixing the price, but agreeing to
pay certain prem m over the New
York futures quotation at cali date.
Tear that the cotton exchanges may
be pu. out of business is causing local
cotton merchants to refuse such bust
ness daily.
IF the Clarke amendment becomes
law, Il will destroy our hedge mar
kets," says c. B. Toward, OF the firm
of Inman, Akers & Inman. 1T even
makes 1t 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-
Rnce 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 little study
20 understand it. l can see how sorue
men, falling to grasp the principle,
become Tabid 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 1t to me, and l have
sold it to a spinner, then / can close
my New York contract. If cotton las
gone down, what l have lost in pay
ing the high price to the farmer l
have made on my contract. If it goes
up, what l have made on the cotton
is Offset by what l have lost on the
contract.
And who bought the contract I
sold in New York? Probably a mill
man who made a contract that day 20
deliver a huge amount of cotton cloth
at a certain price. The loss he suffe-s
II 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 arbi-
trary differ ances now fixed by the eX
change. This is technical point