The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-09-27
RADICAL CHANGES
IN COTTON METHODS
Need for Clearing House Called
to the Attention of
the Trade.
BRITISH SPINNERS' PLANT

1t appears to bs generally conceded in
cotton circles that when the exchange
reopens It will not be long before radical
changes will be made in the methods OF
doing business. Thus far the officials OF
the exchange have had TOO many prob
lens resulting from the contract tanele
and the new cotton law on their hands
to permit them to consider new questions
no matter how important these may be.
The board OF managers has been working
hard on the new rules and bylaws neces-
STATED by the Lever law. and the confer
ence committe has Its hands full with the
proposed syndicate plan
II Is believed that the crisis has been
passed so far as the new cotton futures
law is concerned. as the Cotton Exchange
mas Indicated It's readiness to operate in
full accord with the terms OF the statute.
The framing OF tho rules and bylaws
Is a matter OF hard work in tho details
As for the syndicate plan II Is understood
that the proposal has received favorable
consideration in banking circles, although
tile legal aspects remain to be passed
upon by counsel
II IL not unlikely, when the local cot
ton trade has a chance TO draw its
breath. that the next big problem TO
he considered will no that OF the estab-
lishmcnt OF clearing house that will
include all members. Tho present sys-
tenn. depending on the ringing out of
trades that have been closed out weeks
before for customers. has tied up onor-
nous sums In capital. with the financial
strain acccntuated whenever firm or
group OF operators for one reason or
another refused to match trades in the
ring room and thus release margins.
Active agitation OF the clearing house
question was given quite an impetus yes
terday through tho issuance OF circulars
by two different houses. Shcarson. Ham
mill & 60. and T.. x g. Randolph. In
addition to avoiding the tying up Of
huge sums both OF those circulars
lay stress on the feature that IL will
be- possible through the establishment OF
clearing house to prevent. or at least
minimize, the enormous street" losses re-
sulting from failures
In their circular Shearson. Hammlll &
Co. make the following recommendations
First incorporate under STATE char
ter. each clearing firm 10 purchase and
hold not less than a stated amount OF
stock in the CLEARING association
Second. MI transact ions IN cotton fu-
lures shall he cleared through the clear
ing association unless otherwise arranged
by both parties to the transaction. Upon
acceptance of such trades the clearing
association become. 4 principal In every
contract assuming the position of buyer
10 tho seller and seller 10 the huyer
This results In having all open contracts
stand with the clearing association, ana
with financially sound association losses
through street failures should be no
longer possible
Third. Az new contracts shall he
made with the clearing association at the
closing market price" and all contracts
previously open shall he marked to this
price daily by check or draft as the
case may require. The manager OF the
10 lion uHaL
mark open trades To the market at any
time during tho day that he thinks de-
sirahle
Fourth. The manager Of the assocIa-
ton may call such original margins as
are necessary In his judgment to protect
the association from loss. The amount
OF these calls shall he reasonable and
may he made subject 20 such regulations
us seem advisable. the general Idea being to
increase The amount called per bale as the
lines OF open contracts become excessively
extended This will act as a curb on
overspeculation. thereby protecting the
association from loss.
Fifth. To cover the expense of main
tanning the clearing association. mem
aors shall be charged a moderate fee for
each 100 bales cleared"
Il is also pointed out that there appears
to he nothing In the provisions Of the
Lever law in any way conflicting with the
operation Of such plan.
Foreign mail advcos received yesterday
state that British spinners ere complain
ing about the high price AT which the
Liverpool stock Is held and have sent a
petition to Parliament asking for an in
vestigatlon and a correction OF this con-
dtion This is not surprising in view
OF that fact that mlddling in Liverpool
is quoted at 5.95d. when fresh lmporta-
tons could be made AT least 81 per bale
cheaper. II ~ question, however.
whether the spnncrs are not ignoring
entirely the unfortunate financial plight
OF the Liverpool cotton trade, as the cot
ton now In the big English market was
bought az high prices and the present
tange In the New York contract mar
ket arises over the unwlllingness OF the
American cotton trade to put up the
money to mark down the hedges OF this
cotton. According to feeling in local
circles II would be only fair and patrI-
Otto FOR the British spinners to he willing
| TO pay more for cotton just now in order
To relieve the importers of a burden that
may prove ruinous
There was moderate degree OF ac-
| tivity on the curb yesterday. December
sold at 7.S5, the lowest price yet reported.
| There was further weakening also in
Southern spot prices and offerings are
much more free all over the South. Spin
ners really feel that cotton Is cheap enough
| Just now. but many OF them unfortunately
! have not the resources to buy except on
a hand to mouth basis. n some financial
| aid could be extended TO the cotton manu-
/ facturers OF this country. either through
a more lenient attitude on the part OF
the banks or otherwise. It liz believed that
more permanent relief would be furnished
| in the cotton situation than through the
extension OF the Buy a Bale" movement
and similar methods.