The Bossier banner., 1922-11-30

the volume, when an auditor OF the
house of the Exchange testi-
fed at recent trial of smaller cot.
ton exchange in the Criminal Court Of
New York that the sales on the New
York Cotton Exchange approximated
45,0o0.OOO bales year. Therefore. for
both the New York and New Orleans
Exchanges. the estimate Of 75,OOOOOO
bales is probably correct Of this colos-
sal amount hardly half-milliun bales
represents real cotton, which goes TO
show the enormity Of speculation in
volved, or 80 per cent of the trades
based on paper cotton as against
only l per cent on real cotton for the
legitimate needs of trade. And these
exchanges act, as barometers of the
state of demand for cotton!
Future exchanges cannot function a.
essential markets so long as specula.
tion is allowed to crowd out legitimate
trading. The needs of the situation call
for Federal laws to strike directly at
speculation, especially short selling. bv
compelling the seller to furnish a re-
ceipt showing that he owns spinnable
cotton, or holds an option on the
amount that he wishes to hedge.
Free speculation, as now exists.
causes prices to be radical, uncertain.
illegitimate, up 100 points one day and
down 100 the next day, and forever
nerve-racking to the trade. In recent
years, prices have covered wide
range and speculation has grown To
such proportions that the exchanges
have had to pass rules sforbidding
prices to fiuctuate more than 200 points
from the close of one session of trading
to the close Of the following session.
Speculation has cost the farmer, who
is the backbone Of American CONNER
cial and social progress, more than IT.
teen billion dollars In the past thirty
years. Short selling costs him from Is
to 40 per cent OF the profit on his prod
uct. 1t is the grim reaper Of the profits
that he SHOULD have.
There are many reasons exchanges
should be rigidly controlled or else
abolished. Prices are no more or less
than commercial structure built on
confidence. Trade activity expands and
prices rise as confidence swells In the
business outlook. Prices may be COM
pared also to a fabric in which there
are interviewer the movements Of
prices in general.
Operators on such leading exchanges
as the New York Cotton Exchange can
form pool to break the market They
begin by heavy short selling, In such
volume that the trade cannot absorb II.
Prices break. What Is the next resultl
Prices in the Southern spot markets
drop. Trade buying In the dry goods
market hesitates. The New York Cot
ton Exchange is looked upon as the
barometer Of the cotton and CONNER
cial outlook. If the hammering OF
prices continues. buying In the spot and
dry goods markets shrivels up, and
buying disappears in allied trades
Prices In those markets sympathetical-
ly fall. Business can be and Is wrecked
in this way.
The farmer is the first sufferer. His
suffering extends to the retail mer-
chant, from whom he must necessarily
buy less. The retail merchant II turn
cuts down his purchases from the
wholesale merchant. who then cancels
his orders to the mill. Stagnati0n In
trade comes. All of this because 3
group of operators in Wall Street
seized the opportunity to break the cot
ton market.
Cotton-future exchanges, on the 9TH
er hand, can be useful as Insurance.
markets. Growers owning cotton can
protect Its price by hedge sales on the
exchanges, that is, by selling contracts
against their stocks Should break
occur In the market, they are protected,
as their cotton has been sold on con-
tract at higher prices.
Future exchanges belong with race
track betting, political trusts, the days
of Tweed. houses Of vice and liquor
selling. The new conscience must not
permit vicious speculation to wreck the
fortunes of agriculture and endanger
American prosperity. Future exchanges
should function only as markets Of In
surance. WILLIAM BuTLER.