The Birmingham age-herald., 1920-04-29

] lIalenQ 10 sell that kinO or COIlOH- IuclC , has not been any middling or above de-
 livered to the exchanges for years. say notwithstanding this. through the de-
 mand of the spinners for that class of cotton, the high grades are much higher
 relatively than the low grades, which do
 pass through the exchanges.
 The low grades pass through the ex-
 changes, and they themselves say it is
 too low, too comparatively low. The high
 grades do not pass through the exchanges
 a.; all The price is made by the de-
 mand, just like all other prices on al
 commodities are made.
 The spinners in the largest measure are
 not demanding a bale through the ex- changes, and their usufruct. as 1 have
 stated in my own case, is a hedge. Our company has yesterday and today closed
 out 5.000 Mays which we were carrying as a hedge, and bought advance months
 as further hedge. There was not a
 bale of exchange cotton, good, bad, or in
 different, delivered
 We use the exchanges as they are yes, explained in previous speech,
 use them as 8 hedge: but there is no
 gainsay of the fact that 1t would be fn- con1parably better hedge if it was a
 reliable, stabilized value hedge, and that
 is all we ask.
 The question again is, Is it safe to let
 the exchanges write the laws governing
 their relation to the public? Would it not
 be in the highest degree prudent to write
 the laws governing the public's relation
 to this big business protecting the people, free from exchange environment and dic-
 tation?
 Among the "buggers'' used by the ex- change propagandist is, Cotton is now
 high, and the amendment might be fol-
 lowed by decline In answer, the gam.
 blers on the exchange, with their power
 to assemble and tender low grade, have
 tried this season time and again to break
 the market but have been defeated by
 the strength of the spot holders. This, Ii say, with the assembly of the whole cotton tenderable in low grades. How
 much less could they make a fictitious
 market when half of the contract is high grade? Conditions being equal, it is easy
 to prophecy that with the amendment in
 operation the exchange market will be relatively higher. At any rate the spot
 holders will be in stronger position.
 It is also claimed that it will hurt cotton
 as Q banking proposition On the con
 trary, just as you get rid of the fictitious
 variations on the exchange prices the contract will be stabilized and the col
 lateral will be more veritable. Who ever
 heard of a bank objecting to a more
 stable collateral?
 In the New York Exchange. February ! zo, March cotton was 36.52; March 24 it
 was 4SlS Today May cotton, New York.
 IS 4245. For the first time in years the spot market has escaped the thralldom of the exchange market and is writing records of it's own value. This is what
 the amendment is designed to accomplish Tn all futures contracts, that exchange IVslues should approximate snot -ai.'er. ; that any legitimate dealer should hesi-
 tate il is difficult to understand flo escape the fictitious exchange records : substituting value record, can hurt no : legitimate interest no matter what the grade may be
 Mir. Smith of South carolina-Mr. Pres ident
 The Presiding Offcer-Does the sena- : tor from Alabama yield to the senator ! from South Carolina?
 | MT. Comer-Certainly } ! Mir. Smith of South Carolina-I should like to ask the senator if it is his idea that in case his amendment becomes law restricting or giving the buyer the option of accepting 50 per cent of his contract : namely, 25O00 pounds of lint cotton above ] middling, that those purchasing the con l tract will not demand specific delivery but will simply use it as hedge, as they
 do now, but that the effect on the ex- changes of this restrictive delivery, know : ing that in case they are called for spe- cific delivery, they would have to de- : liver at least 50 per cent of that char l acteT of cotton that the senator claims has not been heretofore carried. would tend to stabilize the relationship between the future market and the spot market
 and to make the exchange a true refiec- ton of the actual value of the thing dealt in.
 MT. Comer-The senator has the ques- ti"n exactly right. I want to compliment
 the senator. That is exactly what is in- tended to accompl sh hv the amendment. MT. Smith of South Carolna-The req
 son why l ask that question is that the
 amendment that I had introduced and Y hich was agreed to retsrictine delivery to ten grades was for that very identical p1rpose: but unfortunately the govern , mcnt of the United States, through some
 one aaVlce, issued an order during the war that no goods made from cotton for government account should be made from any grades heiew middlin., The public WAS not advised of the fact that barring waste, which is ereaser in low grades
 on account of foreign subs onces. having
 stayed in the field and there being more or less trash and dirt, the tensile strength , and the cloth-making qualities of the present discredited lower grades, they are
 quite as valuable as those of the higher grades; but that has nothin~ n Go v-' N the psychology Of the American pu5l:a , ttday. because from uiane im..4e-.~.--. l pubic has been educated to believe that the difference between middling and low 3 middling and strict low middling in the lower grades, and strict middllng, good mGdling and strict good middling in the
 Upper grades. is so great as to warrant
 teis arpitrary fixing of difference. That Sen.; the fact, it was necessary, in order to prcteet the public, to restrict the ex- ' changes to delivery of such grades as the
 mills and the dealers would readily take up, so that they could not pile up lot ! of dog-iaj and snap at every point they
 could absolutely control the prices on | every grade
 As to the Iroposed amendment of the
 senator. just whether or not it will have the effect that he desires and that seem s . tc be indicated Is problefnatical Perhaps tl 1t would rave been better if instead of
 the ten grades they had been restricted ! to in the first instance, as far as hedging n is concerned, to have restricted them as 0 it is purely hedging business that the
 exchanges do, in New Orleans to a greater extent than they do even in New
 York. and even their spot business is e more or less divorced from the hedging i, 1 exchange. and it is done by the spot . merchants, and their exchange simply re- t fleets the condition of the market iron,
 which the types from the table are se- | lected.
 But l wish 10 ask the senator again
 as did in the first instance, if he does Il really think as a practical mill man that
 this difference between spot and future
 which has misled the public heretofore | because here is May. June, July, August U and September. all the future months t quoted from about ? to 8 or cents unde, . spot market when they know that out o, }. the supot supply they have to supply q these markets-that Is. they know they e can De called to specific fulhillment ou,