New-York tribune., 1922-03-15
Dealer Tesiifies That 90
Per Cent Of Business
on American Floor
Is Purely Mythical
Fees Collected
On Fake Trades
NO Deliveries Are Made:
Operators Bel Against
Customers; Fix Books

Virtually all of tho transactions on
inc hoor of the American Cotton En-
change were "cross trades" character
'zed IS buckcting by witnesses in the
John Doc cotton inquiry before Chief
CITY Magistrate McAdoo yesterday.
1t was testified that but little cotton
was actually dealt in; that clients in
the South were unaware their orders
were being executed in fictitious
manner, with no intention of making
deliveries, and that by prc-arrangcment
the operators balanced dummy entries
on the books or the clearing house as
sociation Of the exchange. THROUGH
this method. followed in most cases, the
broker made his commission and the
exchange received revenue of sA on
each 100 bales traded in mythically, it
was shown.
Samuel Landcckcr. Of Ormsbee &
Landocker, former members of the ex-
change, testified that broker who
crossed trade was always betting
against his customer, working on the
theory that his customer was wrong
Such a practice. Assistant District At
the examination, contends is equivalent
to buckcting.
Some Win, Then Lose Double
"Do any Of the Southcrners ever win
out?" asked Magistrate McAdoo Of j.
H. Watson, another witness.
"Yes,' he replied "And then they
lose twice as much
According to the witnesses. who were
former members of the exchange, they
had no other alternative than to par
ticipatc in cross trading. as "eycrybody
was doing it," Complaints tS officers
Of the exchange that it could not sur
vive through these methods, they said,
brought only assurances that cventu-
ally real cotton market would be
established. The Matthewson Trading
Company. which for time made posi-
bic a supply of cotton in the exchange
vas described by Mr.. Watson as a
"gigantic bucSetshop.'
Mr.. Landecker said his protest tc
George w. Pratt, secretary OF the ex-
change, was met with the assurance
that there was nothing to worry about
because. due to the influence Of Au-
gustus w. Graham, president, who for
merly was Federal cotton futures at
torney. "they could do pretty much a,
they pleased until such time as mar
ket could be established" He de-
scribed Mr.. Pratt as "the man who
kept the house Of cards togcther.'
The source Of tho exchanges out
side quotations. which Mr.. Graham was
at loss to explain on Monday, was
revealed by Howard Thayer. bright
y. I ;.lxo 1x-i,D vi .
board boy on the floor. The quotations
for New York and Liverpool, he said
he received over the telephone almost
every minute Of the day from foul
members of the New York Cotton En-
change. across the street. Among those
from whom he received quotations, the
boy testified, were Leland & Co., Clarke
& Co. and firm named "Peers.'
90 Per Cent of Trades Bogus
After tcstifying that 90 per cent OF
the transactions in the exchange were
cross trades, MIR. Landecker explained
the procedure on the floor. The metho ot
of trading, he said. was $50 bad, sc
inaccurate" that it was almost impos
sible at any time to execute custom
ers order, there being no cotton t'
sell. If there should be any cotton, the
witness continued, the price would b'
so high that to buy would be stealing
money from your customer" AS re
suit, he said, some of the brokers made
"pre arrangements" A broker with al
order to buy would rise and cross hi!
fingers. His associate would do like
wise and cry "Sold!"
"There would be no bona fide trans
action" testified the witness. "Th'
brokers in the deal would sign tn
necessary slips covering the supposed
trade, which would go to the clearing
house. In this way the trade was glvel
the appearance of being real, the brok
or received his compensation at the cx
pense of the customer and the exchange
its revenue of 81 on every 100 bales" )"
"The presidents salary ought to b.
larger" Magistrate McAdoo comment
cd ironically. II ~.
Landecker said he had made pre-ar
rangements were Patton & Co., Martin
& Co., Dougherty &, Russell, A: T. Jen
nings g. Co. and Shaap Bros Randolph
Rose jr., of Rose e. Sons, the "ltnes
said. had asked him to "accommodat
him similarly" Mr.. Landecker sai
Continued on page four)