New-York tribune., 1922-03-08
ny. Exchange Traded in
5O.OO0.OOO Bales Last
Year; Only l1.5OO,OOO
Raised in 1920 Crop
BUSINESS Records
Are Kept Secret
Dealer Needs $4,000
for Flucsuation, Says
Witness Before McAdoo

sweeping 'HNest4E"'lol 'nlO meth
DDS erploycd III cotton speculation In
This city was foreshadowed yesterday.
John Doe proceedings were begun be-
fore Chief City Magistrate McAdoo.
based upon information filed by the
Distric. Attorney against unnamed
persons. exchanges and corporations
alleging "bucketing in cotton and the
exhibition of unlawful quotations in
support of bucket contracts and &C.
.itious Advertising to induce the pub
hc to enter into contracts"
The proceedings grew out Of recent
enp'aints made to District Attorney
ssnton accusing the American Cotton
Exchange, Of s3 Beaver Street. Of ir
sgularlties, and the demand of the cx-
eaange for 6 public airing of the
charges. Yesterdays developments in
iicated that the inquiry would not be
limited to the American Cotton Tx
change, but would embrace also the
New York Cotton Exchange and include
its scope every phase OF cotton deal
lng from producer to final buyer.
Charges of Envy Made
Officials of the American Cotton
Exchange have charged that it was
Rinc attacked by rivals in the "bic
Ithsnge" envious of its growth as a
adium OF trade for the smaller pro-
eacers Of the South. The New York
Cotton Exchange is the pioneer ex-
change trading IN minimum Of 100
bales. The American Cotton Exchange
came into the field about three years
az and ten bales IS its minimum Of
trading.
At the conclusion of the hearing yes
terday Chief Magistrate McAdoo said
that beginning next Monday he would
hold series of hearings of wide rani-
hcatlons. In addition to officials and
members Of both exchanges, it was in
dicated planters will be called from,
the south to relate their actual ex-
peIIence With cotton spectators.
Inc hearing brought out that, where
q the production of cot+ II. the
IN ented led States III 1920 amounted to H.
6Vu,OUO bales, between 5O,O0C,OOO and
New York Cotton Exchange alone in
WI. 1t was also established that the
records OF the clearing house Of the
eScnange covering the business Of ita
members we're kept secret. Fifteen
per cent Of the trading was described
as speculative and 85 per cent as
hedging" or insurance against loss
'hfough price fuctuation, wherein the
nrCQucPr Srl
asure, purchases contract for an
equal amount at the same figure for
!ature delivery and thus receives the
sdvantage Of any rise in the market.
Many Lawyers at Hearing
An array Of lawyers attended the
iaearlng. Albert Massey represented
E i5s American Cotton Exchange, George
uOrdon Battle various mem bers Of the
ssSchange and Peter Smith the clearing
nouse association of the exchange.
nnor'ng NJ. Black appeared for Louis
DfooSs, member of the board of GOV
eihoiS OF the New York Cotton Ex-
sAange' and William S. Tozier repre-
sehted \. 3. Pierce, managing partner
OF a "A. housman & Co. Mr.. Brooks
ana , MI. lozier were instrumental in
lean Cotton Exchange and their cir actor aetion
: vas indorsed by the New York Cotton
aa;a ax;enasnee, according to a letter re-
St,",.n iv1Feu ron n the exchange by District
xlne only witness WAS Arthur r.
TSsnSN, Mar "a a member Of the board of the
new V,ot YORK Cotton Exchange, formerly
at IH5s5essGr Hsress9 <. Of comparative literature
tifed afA.,s1a :. ae.. ana an expert who has tes-
ceis! cedeFal and state legislative bodies.
nos. To,.i - sMagistrate McAdoo conducted
,nots ,nots Of the examination, bringing out
cbsna" a5s,noas s., Of tie New York Cotton Ex-
ion Se sno ama information concerning cot
w H. SPECULATION in general.
term. WI, Marsh i was asked to explain the
sSn1. sfi1s known in cotton trading as
ding" "eeA''is ana ssrad-
j,tra, isn't It It fact" inquired Chief Mag
''a'e Mcadoo, that in hedging 8
tC3ntinugd on rsse fnur,