The Bossier banner., 1922-11-30

tiOns Of cotton exchanges and the in
side machinery conducive to the ma
nipulation of prices. To this lack Of
knowledge may be partly attributed the
deficient legislation against cotton ex-
changes.
Exchanges in general, and the New
York Stock and Cotton Exchanges in
particular, are like giant spiders spin
ming an interminable web over the COM
mercial economy of the nation, catch
ing the unsuspecting adventurer in bus
iness Ihe spinning has been carried
on so long, and has so many ramifica-
tions of political strength. that the
threads Of the web have become like
cables of steel, which can be cut and
destroyed only by the steel-saw of pub
lie opinion sharpened to the actual
truth of the case.
The mystery Of cotton exchanges
their history, function, use and abuse,
and how these giant gambling palaces
keep within the law and thrive, consti-
tute story well worth the relating
Al luC 1Coat VI lnC ANS" AOlh SottoH
Exchange in 1920, in celebration of the
fiftieth anniversary of its organization,
pioneer member told how cotton ex-
changes came into existence. He said
that back in the fifties and sixties, cot
ton merchants traded in more primi-
tive way, more from hand to mouth,
and had not developed the great mod
ern system of buying and selling for fu-
ture delivery, of contracting for heavy
deliveries far ahead, which system, as
we know, gives tremendous expansion
to business, and, furthermore, instills
into it a high sense of humor and trust.
and developes business acumen. Their
trading was on narrow scale because
they lacked the protective facilities for
large scale trading, such as highly or
ganized insurance companies to assume
the risks on their stocks.
AS the demand of trade grew. how
ever. one New York merchant took the
initiative by offering to deliver cotton
to foreign buyer, at fixed price on a
future date several months ahead.
That transaction was the forerunner Of
the establishment of the New York Cot
ton Exchange. A few years later. in
1870, the Exchange was established
Thus, the cotton world was given a
liquid trading center for dealing in cot
ton for future delivery.
There are two official cotton ex-
changes, the New York Cotton Ex-
change. which is the leader, and the
New Orleans Cotton Exchange. These
are known as cotton-future exchanges,
since they are markets for trading in
futures that is, cotton for future
delivery.
There are four great cotton-future
exchanges in the world, the two in
America, one in Liverpool and one at
Alexandria, Egypt. Cotton-future ex-
changes have also been established at
Havre. France, Sac Paulo, Brazil, Yo-
kohama, Japan, and at New Bedford,
Mass. the latter for trading in cotton
Of long staple variety. such as the fan
cy varieties grown in the far West and
off the coast of the CarOlinas. These
exchanges are of minor significance as
speculative markets when compared to
the four first named.
COTTON FUTURES AND MARKET
A seat on the New York or New Or
leans Cotton Exchange sells as high as
$4,000. The New Orleans Cotton Ex-
change occupies a magnificent new
structure, shOw-place of that city.
The New York Cotton Exchange is con-
structing two -million-dOllar building
for its future home. Thus, the official
exchanges are preparing for an expan-
sion of speculative trading. and are ap-
parently confident Of the future.
There is distinction between a cot
ton-future exchange and a regular cot
ton market where the world buys sup
plies of cotton. Cotton markets are To-
Gated principally in the Southern
States, near the heart of cotton-grow-
ing sections, in cities such as Galveston.
Houston, Savannah, Montgomery and
Memphis, and SO on, and are called
spot markets." Great quantities of
cotton are shipped to these markets,
where it is sold to street buyers and
merchants, or stored in warehouses to
be sold to factors and mills. The life
blood Of the cotton-growing world flows
through these big spot markets, where
transactions for actual cotton take
place.
On the future exchange. honeuer. cot
ton IS neUer seen. A visitor to one of
the exchanges has the impression at
first, that he is entering bedlam. or per-
haps Wild animal show. A dense
crowd of fifty or sixty men are lowered
over sunken pit, waving arms and
yelling in hoarse voices, loud enough to
awaken the Seven Sleepers. Their YELL
ing is wholly unintelligible to- the visi-
tor The uproar continues from ten
am. to three pm. They are the brok-
ers OF the Exchange and are trading in
cotton on paper, that is to say, are auc-
tioning off contracts. which represent
one hundred bales of cotton each. 500
pounds to a bale, the cotton supposedly
to DC delivered at some future date.
But o'cing to the elasticity of the con-
tract. only a rery small portion of it is
cUer deliUered.