The Birmingham age-herald., 1918-08-01
COTTON EXCHANGES SHOULD REFLECT THE
 TRUE VALUE COTTON
Birmingham. July 90. 1918

bitiIiHSnalnt JULY 3O, IBIS.
 Hon. O. w. Underwood Senator, Wash.
 ihgton, T.. c.
 Dear Senator; Yours enclosing state. ment from Mir. Charles Brand, chiet of bureau of markets. explanatory ot the departments rendition of the cot ton futures act, which contains gener- ous exceptions from the act. and from which we are copying salient polnts and making some addenda, evidencins the importance of Mir Brands posi- tion.
 The chief of bureau, within the law, IS making fiat differentials between all cotton grades, which legalizes the diff ferentials in the cotton grades used by the exchanges in settlement of con tracts. This rendition, by the burea of markets covers the cause of all dis ruptions in the market and the differ enees between the middling of the ex- change and the middling of commerce.
 There are 36 divisions and subdi, visions of cotton grades. A large ma 1ority of the divisions and subdivisions are below middling and a large per cent of these are stains, yellows reds blues and spotted all of which are tenderable on contracts, by both the exchanges, al fiat differences, made by the bureau of markets.
 Within the law, the chief of bureau gets quotations, ostensibly spot quo. tations, but really nominal on ali grades, from 10 spot markets and from these quotations makes composite diff ferentials between all grades. not wlthstanding the importance of verity Tn this value; makes a bona fide con structlon from which results a fiat market. The value of all low grade whites, from strict low middling to good ordinary, and all low grade colors. rom stains to yellowS. spotted and Dues and other colors in strict lov,- and low middling. all of which. from the facts in the case, are impossible of quotation, and when the Secretary Of Agriculture, through the bureau of markets, makes fixed differentjals. if Is, m the extremest degree, fictitious
 carpenter Ss Co, New York; write us under date of July 23 and advise us that 1t is impossible to get an offer of any kind for this class of cotton. Bach. & Co, New York, under date of July ID, advise Tow grades continue to be uruS on the market and are hard to sell at any price" Ellis & Co.,. New Or leans, under date of July 26. advise "fu- lures selling at to cents discount on spot cotton"
 The Secretary of Agriculture through the bureau of markets gives these low grades their fiat tenderable value. with which fiat values, sellers on the New iorh exchange went stunning for this class of cotton, which was used not to fill contracts, but to debauch and de- stroy the real hedging value of con- tracts. MT. Brand shows that the diff ferentials in these off-grades have lately been greatly increased There has been no time since the first of April that the exchanges themselves have not made rom to cents pound more aver- age differences than the fiat difference set by the bureau of markets
 July exchange cotton on the 10th -23d selling in New York, 29d291ac; New Or leans. 2Sd2S19c; July 25, two days later, New York and New Orleans both sold July cotton at 2415c, cents a pound break in two days on the exchange mar ket with scarcely variation on the spot middling market This break and the consequent difference in exchange prices and commercial prices was caused by the contract holder fearing that the slum cotton would be dropped on his contract, just as you would empty a garbage can. and it was an effort to es- cape this low grade, unusable cotton. at prices made by the Secretary of Agri- culture, bureau of markets, which broke the, exchange price cents. clearly evidencing that it is impossible for the government to establish differentials in cotton grades, particularly in the lower grades.
 In stabillzing the market with fiat diff ferentials, the Secretary of Agriculture would have just as much success har- booming a German submarine and just as long as the Secretary of Agriculture allows the bureau of markets to accept quotations from 10 spct markets or 1000 spot markets, and from them make fiat differentials in grades, which differences are thereby legalized for delivery by the cotton exchanges, the cotton exchanges will be used absolutely as a gambling machine, comparable to a shell game or any other low device for taking money from people. A business hedge will be more dangerous than sailing unconvoyed troop ships through the submarine zone. An cratic cotton market is hurtful to farmers and manufacturers alike. Price fixing by the government would be safer and saner, and we urge that the bureau of markets abandon the fiat differen- tials. Let contracts be sold basis mid ding; let tenders be at actual market prices; meaning, what the cotton ten- dered will sell at on the market at time 1 of delivery, appealing to the Secretary of Agriculture, bureau of markets, if | need be- m staple and grade of the cot ton rendered. Yours very truly,
 AVONDALE MILLS. | B. B. CoMER, President and Treasurer. 1
 Adv. |