Brownsville herald. [volume] (Brownsville, Tex.) 1910-current, 1929-01-29
Supervision of Cotton Futures

Much interest y evidenced throughout the south in
the Vinson bill, passed nv the lower house 81 congress
last week without dissent, and which provides for gov
eminent supervision of cotton futures transactions on
the New York. New Orleans and other exchanges. The
measure gives TO the secretary % agriculture the same
supervisory mower over cotton exchanges ne now exer-
eises over the grain exchanges, the most sweeping pro-
vision being that for southern deliveries. which was
vigorously opposed ~ the New York exchange.
IL the regulations are put into effect, options O
which the exchange trade will make deliveries accept
able At any one ~ ten markets 70 be designated IN the
south. This eliminates the longtime practice Of the
New York exchange which made deliveries read At Ne"
York. This point was argued on the question Of freight
rates from the south to New York. proponents q the
bill contendinr that cotton shipments 70 Europe and
the rest ~ the world could re sent more chearly frora
southern ports. This feature enlisted the support Of
the southern members. snd the New York exchange, ap-
ps,ently. was unable q effect a consolidation in oppo-
titon.
Under the vinscn bin exchange dealings in futures
y subject to such strict regulations a. those which
now govern the grain exchanges. The house committee
on agriculture reported every section Of the grain
futures Let Il set out n this bill and made applicable
10 cotton exchanges with a few minor additions
Regarding the power 70 be given the secretary OF
agriculture. the committees report explained that the
hil Il intended to give the secretary of agriculture su-
pervisory power over the cotton exchanges where fu-
,ures ere dealt II. and also 70 regulate transactions
where futures are dealt in. and prohibit manipulation.
In regulating manipulation the bill calls for tbs
creation Of a board ~ controls within the exchanges
a. cooperate with the secretary in carrying out Is
farms. These are similar 70 the boards Of trade which
were made operative in the grain exchanges under the
grain futures act
The committee, in presenting its reasons for recon-
u,pdinr southern deliveries. pointed out that the
freight rates from New York to the principal ports q
Furope and Asia are no cheaper than from the south
en cotton ports. hence all the freight and other tx
rsnss for the long haul 20 New York for tender on fu-
lures contracts is 50 much waste.
The record az the hearings show that the New York
markets must advance 20 a level q 81 a bale over the
southern market in order TO draw a stock Of cotton to
New York FOR the protection Of hedges, and then after
the cotton arrives there. due 10 the fact that IL 10 work
less in New York than in southern ports, the New YORK
futures rricss must decline 70 a level under ne
spot priess in the south before the stock can be sold
20 the mills. This economic waste 81 about 81 q bale
creates in the New York market a maniPuiaiivs condi-
tion which very seriously impairs the value Of New
York contracts for legitimate hedging purpose, tbs
committee declared.
The committee advanced the principle that delivery
on future contracts Of any commodity should Be- made
only II those places where the commodity ~ normally
sent and kept for merchandising purposes. asserting
that otherwise manipulation T. inevitable. This principle
had 4 strong appeal 20 the representatives OF sgricul
tural states. and especially the south.