New-York tribune., 1918-11-14
Short Selling in
Cotton Forbidden;
Prices Fall Again
Government Body Acts to
Prevent "Undue Specu-
lative Activity"

Short selling was forbidden at the
New York Cotton Exchange yesterday
on orders from the committee on cot
ton distribution at Washington, of
which Charles J. Brand, chief of the
Bureau of Markets, is chairman. The
action of the committee. it is believed,
was taken as result of great decline
OF cotton prices Tuesday, which was
automatically limited to 200 points by
the rules of the exchange.
The absence Of short selling failed
to check the slump of prices yester
day. which closed at a net decline of
from so to ITS points. Although short
was permitted and gave the market
more firmness than it otherwise would
have had. Brokers on the exchange at
tributed the falling of prices to hedg-
ing.
Foreign Selling Restricted
Walter L. Johnson, of Shearson,
Hammill e. Co., president of the ex-
change, yesterday morning read the
following message from the committee
on cotton distribution from the ros-
trum of the exchanges:
"In order to curb undue speculative
activity it becomes necessary at this
time to prohibit further speculative
short selling on the New York and
New Orleans cotton exchanges, and the
members of these exchanges are here
by notified that all further speculative
short sales are prohibited. Hedge
sales may be made on condition that
an afidavit from the seller will follow
that the sale is a bona fide hedge sale
against the purchase of cotton. No
.A11 40
except in liquidation Of long contracts
are to be executed"
In interpreting the last sentence of
the message brokers said that Liver
pool interests had sold between 200 900
and 100000 bales of cotton in the New
York market within the last few
weeks and desire dto continue to sell,
the market In this connection it was
said that selling orders from Liverpool
yesterday were not executed because of
the new order
Will Narrow Market
Members of the Cotton Exchange
differed as to the effect Of the new
orders on the market, but most agreed
that it would tend to make the market
relatively narrow, at least until the
speculative element became willing to
go lorg. An official Of the exchange
said that the raison d'etre of the Cot
ton Exchange was that it provided cot
ton shippers and spinners q hedge
against future price changes and that
inasmuch as the new rules allowed
hedge sales the principal function of
the exchange would not be impaired.
He added, however, that speculation in
cotton would be almost eliminated by
the barring of short sales.
ot ckoI ~
port Immediately all sales made on
Tuesday, stating whether they were
executed for mills. for hedging pur-
poses or were purely speculative short
sales. 1t is understood that this data
is to be forwarded to the Washington
authorities.
The market opened weak yesterday
morning, as many selling orders that
could not be executed on Tuesday be-
cause of the rule which fixes 200 points
as the maximum fuctuation for sim
gle day were carried over. The an
nouncement that short sales were pro-
hibited and much short covering caused
, rally of 1875 to 145 points below the
early low level. Except for the de-
mand from shorts there was little sup
was enough liquidation and hedging to
send prices back to approximately the
low level. Southern spots as officially
reported were unchanged to 100 points
: lower.
The local market for spot cotton
was quiet and 165 points lower, at
27.75c for middling upland, compared
with 29.40c the day before and 29.7Oc
for the year before. There were no
sales of spot.
The range of prices follows:
Yes'day'a Tuesday'a Year