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

Much interest is evidenced Throughout the south in
the vinson bill. passed by the lower house Of 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 Of agriculture the same
supervisory power over cotton exchanges ne now eAer-
cises over the grain exchanges, the most sweeping pro-
vision being that for southern deliveries. which was
vigorously opposed BY the New York exchange.
II the regulations are put into effect, options o.
which the exchange trade will make deliveries accept
able at any one Of ten markets to be designated in the
south. This eliminates the longtime practice Of the
New York exchange which made deliveries read at New
York. THIS point was argued on the question Of freight
rates from the south to New York, proponents az the
bill contending that cotton shipments to Europe and
the rest Of the world could he sent more chsapiy froa
southern ports. This feature enlisted the support Of
the southern members. and the New York exchange, sp-
parently, was unable to effect a consolidation in oppo-
sition.
Under the vinscn bill exchange dealings in futures
are subject to such strict regulations as those which
now govern the grain exchanges. The house COMMITTEES
on agriculture reported "every section Of the grain
futures act IS set out in this bill and made applicable
70 cotton exchanges with a few minor additions
Regarding the power to be given the secretary Of
agriculture. the committees report explained that the
bill il intended to give the secretary Of agriculture su-
pervisory power over the cotton exchanges where fu-
lures are dealt in. and also 20 regulate transactions
where futures are dealt in, and prohibit manipulation
In regulating manipulation the bill calls for ths
creation az a board Of controls within the exchanges
20 cooperate with the secretary in carrying out its
terms. These are similar to 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-
nending southern deliveries, pointed out that the
freight rates from New York 20 the principal ports 81
Europe and Asia are no cheaper than from the south
ern cotton ports. hence al the freight and other eN-
pense for the long haul 20 New York for tender on fa-
lures contracts Is 80 much waste.
The record 81 the hearings show that the New York
markets must advance to a level Of s. a bale over the
southern market in order to draw 2 stock Of cotton 70
New York for the protection Of hedges, and then after
the cotton arrives there. due "a the fact that IL u work
less in New York than in southern ports, the New York
futures prices must decline to a level under he
spot prices in the south before the stock can be sold
70 the mills. This economic waste of about 81 a bale
creates in the New York market a manipulstive condi-
ton which very seriously impairs the value q New
York contracts for legitimate hedging purpose. tbs
committee declared.
The committee advanced the principle that delivery
az future contracts Of any commodity should Ne made
only nj those places where the commodity is normally
xent aud kept for merchandising purposes. asserting
.hst otherwise manipulation Is inevitable. This principle
had a strong appeal to the representatives Of sgEieas
turzl states. and especially the south.