New-York tribune., 1922-05-23
Ex-Broker Tells
How 'Affinities'
Bucket Cotton
Says American Board Firms
Exchange Identical Fake
Sales, Take Commissions,
Without Hurting Market
Practice General in 1921
Trusted to Luck Customer
Would Not Ask Delivery:
Some Actual Deals Made

Methods and slang Of the American
Cotton Exchange were described yes
terday at the trial Of the exchange
before Supreme Court Justice Marcus
and jury on an indictment charging
| buckcting of orders. a former mem
Der Of the exchange admitted on the
! witness stand that the practice Of
bucketing was irdulged IN extensively
IN 1921.
"Affinities," in the srgot OF the ex-
change. it was said, were brokers who
confined their o9tcnsible sales and pur-
chases OF cotton to their own cotcrie,
A buying from B and then B buying
from A, 50 that the equilibrium of
the cotton market was not affected in
The least. Both brokers bought and
sold with fingers crossed and each
would receive a commission or the
/ transaction, some Of which went to the
road agents VINO drunmed up business
IN the South and obtained customers
for the brokers.
Samuel Landecker. who wa. mem
Der Of the exchange for more than
year and was member of the firm
Tor the prosecution yesterday He ad-
mitted he knew what bucketing was.
There was much OF it on the American
Cotton Evchange IN 1921, he said BE
mad several "aHnites" himself he ad-
mitted, some Of them being Martin
& Co. Daugherty & Russell, A. r. Jen-
nngs and C. L. Patton. Landecker
was asked whether he ever expected
to deliver the contton contracted for
and he replied in the negative.
No Customers Ask Delivery
Albert Massey, counsel for tine ex
change in cross-examining Landccker,
, asked: Suppose III these So-called
fictitious sales your customers had
asked for a delivery of the cotton ?'
II wouldn't know where TO tart o
look FOR t." replied the witness. "bu,
fortunately my customers didn't ask
:or it,
Landecker testified that The average
number Of exchange members in the
pit every day was only ten, whicn con
tradicted the statement made by
Charles G. Healy, secretary Of the
clearing house OF the American Cot
ton Exchange. who preceded Landpckcr
on the stand who placed the average
daily attendance IN the pit at thirty
five
LaNde chcr said thst last October he
asked Augustus Graham, president of
the exchange, to stamp out the practice
Of bucheting. Hugo Wintner. Assist
ant District Attorney, asked the wit
ness Were there some active brob
ers ANXIOUS and willing to do legit
mate trading?'
II think there were few Of them"
sad 1.andecker.
Landecker explained the cross fin
gered bids by saving that method Of
expression IN the sign language OF
speculation was used to impress such
customers that happened TO be in the
exchange He admitted that in the
clearing house reports of Ormsbee and
Landecker smd A. 7. Jackson e. Co., for
the month Of November, 1927. there was
not one bona tide transaction. His
seat on the exchange, the witness SAID,
COST him $3.50. The exchange cha sed
! cent bale on sales and the brokers
collected s12.5o a hundred bales.
Charles X. Hraly. secretary of the
clearing house Of the American Cotton
Exchange, brought the clearing house
sheets to court with him these showed
chat on November 5. 1921. A. 7. len
nings e. CO. bought from Or.n sDee &,
Landecker tl.irtv bales OF cotton Tor
March delivery at 1922 cents. It also
was shown by the sheets tnat Orm soee
& Landecker bought from A. 7. JeM-
nings &, Co. the same number OF bali
at the same price. Thus, Mr Wintner
contended, the two firms Of brokers re-
ceivcd commissions on two sales. the
clearing house received revenue on
two sales and so did the exchange
while the brokers were not required to
put up penny in margin, as the Two
sales left things at par
Healy denied that all the trading
was done by only fifteen brokers and
that thirty FIVE brokers in the pit
Asked by the prosecutor whether il
would indicate anything to him if the
sheets showed that two brokers dealt
only with each other over period Of
year, Healy replied in the negative
He said he had seen sheets of the New
York Cotton Exchange
did you ever see one broker deal