The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1914-03-04
TO CHECK COTTON GAMBLING.
SENATOR r.. -. SMITH THROUGH
AGRICULTURAL COMMITTEE
MAKES FAVORABLE RE-
PORT ON FUTURES
BILL.
Measure Sent to Upper House From
Committee Would Bar Use of Mails
or Telegraph to Traders Who Dis
regard Government Standards of
Value According to Government
Grade.

Grade.
Washington, Feb. Ex-senator
Smith of South Carolina today sub
mitted favorable report OF the com
upon his bill to regulate trading in
cotton futures and provide for the
Standardization of upland" and
"gulf' cottons separately. The bill
which Senator Smith had drawn and
which was introduced in April last
provides that any person. corporatin
ETC., engaged in interstate commerce.
in making or Offering for sale any
contracts for the future delivery of
cotton shall specify the grades con-
tracted for in each contract, and that
these grades shall be according to the
government Standardization. The ef-
feet of this measure will be practical
ly to foorce the exchanges to adopt
the government standards of cotton.
A. further section of the bill of
Senator Smith provides that the inter-
state means OF communication, such
as the mails, telegraph lines and ex-
press companies. shall be denied to
persons and corporations i'm making
contracts which do not conform to the
Of ho lyoc
the violation of the terms OF the act
a misdemeanor. punishable by fine or
Imprisonment or both.
When the bill was considered by
the committee last summer, Senator
Smith was authorized to write the
favorable report Of the committee on
it. Pending certain Investigations
which the department was making
under the terms Of resolution of
Senator Smith to test the spinning
values Of cotton, he withheld making
the report on his cotton futures bill
until these tests had been completed
Now that these tests have been fin
ished and So completely prove the
contention of Senator Smith that af-
ter all the intrinsic values of the diff
ferent grades Of cotton are practically
the same and that the main differ
ence Is in the amount of waste, Sen-
ator Smith has prepared the detailed
report which he today for the
committee on agriculture, SUBMIT ed
to the senate. The report, although
not very lengthy, clearly sets ou,
the practices of the cotton exchanges
of Commissioner Herbert Knox Smith
as to the operations Of the New York
exchange Senator Smith discusses
in clear manner the fixed differ
ence system and shows this to be the
basis OF the Objectionable operations
OF the exchange.
This means" the report continues
discussing the method of fixed differ
ences, that the price of the different
grades, as compared with some grade
taken as a standard of comparison
and universally known as 'middling,
is fixed arbitrarily by the exchange
for period of time.
'TC illustrate: Prior to January /
1908, the New York exchange had di-
vided the different grades of cotton
into 80 grades. 'Middling' was the
standard Of comparison. This might
be regarded as representing zero. All
OF the grades below it. IL in number,
were considered of less value: all of
the grades above it, IA in number.
were considered of greater value. The
committee of the exchange, charged
by the exchange with the duty Of
fiXing difference, would meet on a
given date and determine what would
be the relative prices OF all the grades
above and below middling' for the
next three months. 1t will be under
stood that during all of the years
preceding, the trade had recognized a
difference in the value of the grades,
but as a matter of course this differ
ence was largely dependent upon the
supply of the different grades They
were never uniform in their volume
one season might be open and an
other might be cloudy and damp.
During the open season there would
be naturally greater supply Of the
more desirable or higher grades and
"a lesser supply Of the lower or more
undesirable grades. The difference
between them would be less because
there were certain mills which regu-
larry bought and used the lower
grades; others bought and. used the
higher grades. When, therefore, the
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