New-York tribune., 1917-06-12
Exchange Members Think
Buying of Futures Will
Have To Be Checked
Staple Higher than
In Civil War Days
Washington Said To Be
Ready to Act in Case of
Manipulation"

Facing conditions similar TO those
which led the Chicago Board of Trade
TO suspend trading in May wheat, lead
ing members Of the New York Cotton
Exchange are considering the possibil-
ity of having to follow suit and place
an embargo on trading in October cot
ton. Cotton for October delivery sold
yesterday 11l cents a pound, or s6.25
bale, higher than at Saturdays close,
when the prices were higher than at
anv time during the Civil War.
Yesterdays prices, however. were
really much higher, as compared with
Civil War prices, than would appear
10 the casual observer. for Civil War
prices were based on fat currency that
sold at a discount compared to gold,
and cotton to-day is sold on gold
basis.
No formal action has yet been taken
BY the managers Of the exchange, but
the situation that threatens because
of the immense demand at home and
abroad and the small crop in sight has
led to an unofficial inquiry in Washing
ton as to what the government atti-
tude might be in the event of run
away market developing. The ennis
sary sent TO the capital reported that
so long as the market behaved in
natural manner no action would be
taken. but If there was any evidence
of manipulation. calculated to create
wide moves. either up or down, prompt
action looking toward the close of the
exchange might be looked for.
Buyers Send Price Up
Trading on the New York Exchange
was restricted yesterday by the absence
Of sellers. there being little opposition
20 a buying wave that sent all months
higher than "a cents a pound. At the
close the market was from 1.O7 TO LII
cents a pound higher, or from $3.50 TO
S5.55 a bale. Spot cotton also sold at
the highest price on record. touching
24.65 cents, a jump OF nearly seven
eighths of a cent pound
The small volume of buying which /
sufiiced TO send prices up to these un-
precedented levels was in the main /
from mills. coupled with the covering
of some shorts This was accompanied /
by talk of larger export demand and
increased shipping because OF lower /
marine rates.
The situation existing in cotton is
described as paralleling that on May ]
wheat on the Chicago board. The
situation here, as there, is due in large /
part to the fact that Europe and Japan |
have been heavy buyers of the staple /
for future delivery and are expected .
to insist on the delivery OF actual cot /
ton. Home consumers, facing large de- /
mands from the government and the /
ordinary trade, are also large buyers.
Crop Estimated at 100000 Bales
Against this demand is the crop in |
sight, estimated by the government ex- ,
perts at less than 100000 bales OF
500 pounds each, compared with an
estimated world requirement Of 49,
100000 bales. As foreign buyers,
particularly those acting for govern
ments, are expected to hold their con-
tracts for maturity and the mill IN
terests are expected 20 do likewise, the
effect is not altogether unlike a corner.
II is situation not relished by many
Of the larger cotton houses, who not
only are insisting on larger margins
than the $40 minimum which the eX-
change insists must be deposited
against every contract, but are discour-
aging operations on the speculative
side of the market. This is mainly
defensive, for il is realized that con-
ditions might develop over night which
would duplicate the market Of early
February, where. in q few minutes cot
ton declined S25 bale.
Consider Protective Measures
Members Of the exchange would not
discuss the situation for publication
yesterday. Privately they admitted that
conditions were Such that protective
measures are being informally consid-
cred, and expressed satisfaction over
the general belief that certain plungers
who in the past have carried large lines
Of cotton. are now out Of the market.
The situation in New Orleans yester-
day was like that in New York. In that
market a food Of buying, apparently
from outside sources, swept the pro-
fessional element of its feet. causing
rise of nearly Sc a bale.
Men familiar with the cotton market
said yesterday that the home demand
for cotton largely reflects the effect of
war economy, the higher prices of
woollen and other fabrics increasing
the demand for cottons.
The effect Of putting an embargo on
trading in October futures on the eX-
change would be 20 check the specula-
tive element and restrict trading to
consumers and those actually having
cotton in hand or in sight. When the
Chicago board stopped trading in May
wheat and fixed a price at which short
contracts must be filed prices for all
months reccdcd.