The sun., 1918-08-14
INVESTIGATION OF
COTTON PRICES
Government Starts Hearings
at New York Cotton
Exchange.
TO QUIZ OTHER CHANGES
Future Contracts Make Up Is
Per Cent. Of Exchange
Dealings.
TO QUIZ OTHER CHANGES

The nrst Of the hearings to be held
by the Bureau OF Markets of the United
States Department OF Agriculture in It's
investigation to learn the reasons for
the wide difference between the price OF
spot cotton and the quotations for fu-
ture contracts was held in the commit.
tee room OF the New York Cotton En-
change yesterday.
Charles A. Brand. chief Of the Btu
reau OF Markets. who Is conducting IN.
hearings. ELECTED tho information early
In the day that the disparity between the
price OF spot cotton and future contracts
had its origin with the entrance of the
United States into the war. Late In the
afternoon Walter L. johnson. president
Of the Cotton Exchange. in discussing
the difference In the prices Of spot cot
ton and futures said the buyer OF spot
gets the cotton he wants because II ha,
been classified. whereas with regard to
futures the seller naturally delivers tho
poorest quality he car under the con-
tract. This and the labor situation, TO-
gether with the fact that there is prac-
t.cally no market FOR the lower grades
Of cotton are attributed by Mr.. John.
son as the reasons for the difference in
prices.
Mr.. johnson said that before the
United States became large buyer Of
cotton there was no trouble experienced
in disp6sing of low grades Of cotton, but
that a decided falling OF in the market
for this class Of the e.aple had oc-
CURED owing, to the rigid inspection BY
the Government He said be believed
so to Sc per cent. of the spinners were
working on Government contracts
Mr.. Brand declared that his bureau
had gone to the War and Navy Depart
ments last March and asked for relax.
alton of their rules. He said the lower
grades Of cotton were just as suitable
for the making OF olive drab cloth and
other fabrics used In the service as the
high grades.
Sidney Y. West of Little Rock. Ark.
said the production OF low grade cotton
this year was slightly over that Of the
last four years, and that It was be-
cause Of the discrimination against it BY
the Federal authorities that the market
had practically gone to pieces.
In opening the hearing Mr.. Brand
said:
The investigation is not limited 70
the local exchange. The Secretary Of
Agriculture has instructed tire bureau
to look into the disparity between tho
prices Of spot cotton and cation bought
or sold on contracts for future delivery
The disparity has been great for some
time and seems to be wholly unjustifed
To discover the causes and apply reme-
dies Is the purpose OF the inquiry.
Members of the exchange and the
general public are invited TO attend and
give any suggestions they may have TO
| offer. The bureau has done considera ole
| investigation and has it's own answer
but wishes to get the views OF the trade
! before compiling a report.
complaints against exchanges have
been very acute recently, especially in
| the South. and these complaints. as is
| known. are OF a very serious nature
Nothing revolutionary is contempla ted
but we are looking for basis of facts
| on which to recommend reforms"
In asking whether an effort To depress
the market by short selling could be
detected. Mr.. Brand was told that Il
would be very difficult unless the move
ment was of considerable volume AND
in that instance the Government would
be notified. Mr.. johnson said between
is and 20 per cent. OF the trading en-
the New York Cotton Exchange was n
futures. He said this trading could ne
speculative, but that Il was not alwavs
easy to tell II a customer was speculat-
\ Ing or not The deals. he added. are
made through brokerage houses and no
| producer or direct handler trades on the
| exchange.