Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1922-11-10
market is called the 'long" Or buying

side .....,.... .....--.... ,rrr.,-pse "
Short selling should be permitted
only as a protective measure, to enable
growers to hedge and insure the price
of their crops. II then makes the cot
ton future exchange what it should be
an insurance market and not a
gambling hell. But as a weapon in the
hands Of the spcculator, it too fire.
ducntly means a stab in the back of
the cotton grower.
| If speculation could be eliminated
from exchanges, the great spot markets
OF the South would then become the
rightful leaders in quoting prices.
Attempts have been made to regu-
late gambling on exchanges. Statutes
such as "An Act to tax the privilege OF
dealing on exchanges" and later in
1916, THE United States cotton fu-
lures Act" were passed at Washing
ton.
! Legislators who drew these acts
realized that speculation was so i'm
pregnably intrenched in future eX-
| changes that the time was not oppor-
tune to try to dislodge it altogether.
Their object was TO narrow the scope
of future exchange, and in turn re-
ducc gambling, and minimize the harm
| in short selling.
The United States cotton futures act
/ r
passing through the exchanges, such
| as cotton below the grade of Good
Ordinary, or less than seven -eighths
of an inch in length Of staple. Specu-
lators are thus prevented from buying
up cheap, unspinnable cotton and
dumping it on exchanges Sto break
prices. The act undoubtedly has bene-
fetal features, such as requiring the
Secretary OF the United States De-
partment of Agriculture to set up Of
/ fetal Gotten standards, and giving to
! him some authority over future cx-
! changes. The act does not reduce the
volume Of speculation, which is the
cruX of the whole situation
Only a small amount Of actual cotton
is handled by future exchanges. The
exchanges never did and probably
never will function as markets for the
sale of real cotton. The small pro-
portion OF real to fictitious cotton dealt
! in on the New York and New Orleans
Cotton Exchanges may be known,
when we consider that the total sales
on these exchanges per annum aggre-
gates 100000 bales. There is no way
to secure figures on this subject, as the
clearing house of the New York Cotton
! Exchange is a secretive organization,
giving out no information whatever Of
the total sales. Even brokers Of the
exchange do not know the approximate
amount. Some light was shed on the
volume, when an auditor of the clear
ing house of the exchange testified at
a recent trial of a smaller cotton eX-
change in the criminal court of New
York that the sales on the New York
Cotton Exchange approXimated 4F,000,
600 bales a year. Therefore, for both
the New York and New Orleans EX-
changes, the estimate of 75,000.000
bales is probably ,Jrrect. OF this
| colossal amount hardly a half million
bales" represents real cotton, which
goes to show the enormity of specula-
tion involved, or SO per cent. Of the
trades based on paper cotton" as
against only one per cent. on real cot
ton for the legitimate needs Of trade.
And these exchanges act as baro-
meters of the state of demand for
cotton
Future exchanges cannot function as
essential markets so long as specula"
tion is allowed to crowd cut legitimate
trading. The needs of the situation
call for Federal laws to strike directly
at speculation, especially short selling,
by compelling the seller to furnish a
receipt showing that he owns spinnable
cotton, or holds an option on the
Famount that he wishes to hedge.
Free speculation, as now exists,
tcauses prices to be radical, uncertain,
illegitimate, up 100 points one day and
down 100 the next day, and forever
nerve-rac cking to the trade. In recent
years, prices have covered a wide
range and speculation has grown to