Historical Newspapers of South Carolina

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The An Educat facturing, Athletic C Royal Scot Classic posing of The Greate] The Specta< will be thousand The Progre; ually attractive : Come--Mini FOUR BIG DA1 Rousing Big Old Wail Strcct Controlof Cotton Primcs (Continued from page Three) is an ignorant delusion. The Liverpool Cotton Association wa sthe mighty. leader of prices until the outbreak of the World War. This leadership resulted from the fact that three fourts of the cotton raised in America was exported to Europe, chiefly to England, and also because London was the money and trade- ac ceptane market of the world. Liver pool was more or less the dictator of prices. If prices at Liverpool de lined. but American markets failed to follow, London financrs, who were the sour1ce of most of the loans on cot ton stocks, would oft en get bury by call ing t he lon s, forcing up rates on money, andi in this way compelling American hohilers to dump cotton and liteak the Amercatn market. The fmnancial powers of Enghand em ployed every means to wrest cotton from A me rican grlowers as cheaply as ho mian i nseanuity couli get it. Southern plant ers received 201 cents a pound, as :e n average', for thei r producits for 30 yearis nft er t he orgain i-zation of this assiciationt. Thus, kept ini poverty, they were forced to sell th1e gre'ate'r portiont of their crop in the autumtn, at or benlow the cost of product ion. Ntatu rally, t hey wore slaves of peren nial debt. T1he war changedl this monoptoly and shifteI te bahmaee o1 power from I .ondont to New York, the piresent money mmket of the world. A meri can consiimption of cottont has in creasid 5(t per cent in five years. American mills now consuime as much .,f she soultherni Arop a:; foreign mills ?ornihinid. If lnili Ih interests a ttempt. a con Spiiry In firce down prnices, they can no longi r fTe ti velyv employ the ma chitnery if t.ive''pool and the nil of London hankhers to do the trick, bu11t mu tst secue te nsu lppoirt of New York interestls ami nanipubale the New York Cot ton IExehaniige by wvholesa le .short selline!, a niefarious method of trading with evils I hat are not fully Tlhe fluctution~ i or1 pieis offeris ai st rong! temlation f or easy mniey. rFliuuationt in vites ~ spcubti on, which in tturn creates grieater fluictuat ion. floth the fluctuation of P ries andl spjecul at ion have inc rea Ised In rec-ent years ,a ided by the il aboatI.e wiire Andu ( cabl syste'ms wvhiich tmake the w~or'ld a homogeneous unit. As an illustration of howv quickly inhabitants of remnotei regions can trade on New York< tinil (hicago Exchanget, the fob foing occurrence is given fromt my personaul Oxpeariene: I pitrchased ior "ftures"' on the (Chicago Board of Trtde, throtugh a biroker of Biri mi nghami, AlIabmayj. I then went for ani otiing in the sothern part of the stt'e, ahout lo0) miles fronm Hirming hama. On Sturdtay, at fewv minutes before the close of trading on the Chicago Botrd of Trade, I called over long-distance telephohie andI naked the Birmingham broker about the market. I~e informed me that a .iump had ec curred in corn prices. Thereupon, I directerl him to rush an nryerm to Chi ie Merch Cordi reate Nove ional, Enterta Mercantile, F )ntests and M I :h Highlanders Band famous masterpiece; c M. J. Riley Midway :ular Pageant of Prof s of School Children; isive Merchants of St rices. Hence you ce le with the merrycr< (S. Join the jolly la Time. cago to sell my purchase before the close of trading, if possible. The time was then one minute before the close. lie had a direct private wire to New York, but none to Chicago. So he had to send the order via New York. .(t reached the floor of the Chicago Board of Trade and was executed before the close of trading, while I, 1,500 miles from Chicago, was holding the tele phone receiver. A trader may either buy or sell, play the market either way, whether or not he owns a bale of cotton. This form of speculative selling is certain ly abusive to the interests of the cot ton grower. The trader may "short sell" any amount of cotton he so de sires, provided he has sufficient funds to margie the sale. For instance, Mr. A reqluests a b)rokoer to sell 1,000 bales for December delivery at 20 1-2 u'ents a pound. The broker makes the sale on the Exchange, and then gives Mr. A a statement, reading: "We have this (lay sold for your account 1,000 hales, Decembler delivery, 20 l-2c." Oln the hack of the statement, the fol lowing condlit ion is pintedl: "All or liers for the purIIchaise or sale of anv article are received andl executedl with the (distinct undlerstandling that Actual cIdlivery is contemnplatd-- ..''"IThus. the t ransact ion is giv'en the flavor of a legitimate trade and is made wvithin he law. Although Mr. A has made a tenta Live pledge to deliver 1,000 bales ina [ecembher, he has no intention whatso ver of doing so. as he probably never iwned a bale in his life. Any moment luring trailing hours, before the month of D~ecember arrives, he can lose his trade, take his pr'ofit or loss, iad be reliever of the obligation to Ii'liver in Deember, simtpl y by buying b~ack as nany hales as he sold. Short selling ,alIthourarh cond'wi d run paper, has as much weight in dle. pres(s51ing prices as thoullgh actual cot ton were being sold. Mr. A exercises as mul ch weight umpoin the nrice level when he ''short sells'' 1,000 bales as i a farme does when he sells I ,000) hales that he has prcodutced by the sweat of his brmow, ont 5.000 acres at a cost of some .$75,000. Mr. A is allow (.1 to "short, sell" 1,.000 bales on a (apital of $7,500, which is the usual nma rgin0 Y~t rqi redl biy brokers, and which is exactly onie-tenth of the amount thie planter has to pay to produc oe andl sell 1,000 bales. No wondler the nlante'r is discouraged, when the wvhole' worl can sel1l cot ton, specu latively, at one-tenth tne rcst of produtction. TChat is the sorious reanson why short. sellIinrg distorts the basis of 5uply aind deiand. Thel cotton world hioks to fu tote exchanoges to register prices that truly refleet supply and (Ie miiand, but11 wheni nine-tenths of the turnover on these exchanges are pap er sales, fictitious cotton, supply andl dema nd becomie a mockery, since a sp~urious price prevails that falsifies truu vailues. If a crop oIf 10,000,000 bales is rais edo, how may planters receive a legi timiate price for it, when speculatofs are alolwed to "short sell" 25,000,000 bales, and paralyz.e the price and de mand? Selling of this nature spreads dis content throughout the economic world. F'armor beoe depressed, ants' of illy Invite :r Surr mber ining, Co-oper ine Arts, Flor any Other Clea EATURE A' --Twenty-five Song Sol ;---the famous Parento: Attractions, clean anc ress on Sumter Count commercial presentat niter will have on Spe n make your visit pro: )wds that will be her ughing throngs. She refuse to raise bumper crops, and emergency organizations spring up and spread propaganda urging farm ers to hold down acreage and auto matically force up prices. The evlis of short selling Ahould not be tolerated by the Federal govern ment. In fact, in 1918, the United States Department of Agriculture I temporarily stopped short selling, l after English spinners and speculators had "short sold" 1,000,000 bales on the New York Cotton Exchange, and I had broken the price 10 cents a pound, I or a loss of a half-billion dollars to the South. Short selling represents the "short i side" of the market, which is usually the side on which professional trad ers operate, as quicker profits can be< made on this side. Prices fall faster than they rise. Therefore, it is the< shortest wvay to profit. The otheri side of the market is called the "long" 1 or buying side. Short selling should be permittedl only as a protective measure ,to en able growvers to hedge andl insure the price of t'eir crops, It then makes the cotton future exchange what it should be--an insurance market and< not a gambling hell. But as a weap on in the hands of the speculator ,it too frequently means a stab in the the hack to the cotton grower. If speculation could be eliminated from exc'isingecr, the -great spot mar kets of th~e Senith would then oe tomne< the rightful leaders in quoting prices.i Attempts have been madle to regu late gambling on exchanges. Statutes such as "An Act to tax the privilegei of dlealing on exchanges," and later in 1916, "The United States cottont futures Act," were panssed at Wash-c ington. Legislators who drew these acts realized that speculation was so im pregnably intrenchedl in future ex changes that the time was not oppor-i tune to try to dislodge it altogether.< Their object was to narrow the scope)i of future exchanges, andl in turn re du1ce gambling andl minimize the harm in short selling. The United States cotton futures act forbids some of the lower grades from passing through the exchanges, suhas cotton below the grade of Good Ordinary, or less than seven eighths of an inch in length of staple. < Speculators are thus prevented from buying up cheap, unspinnable cotton1 and dumping it on exchanges to break< prices. The act undoubtedly has benet ficial features, such as requiring the Secretary, of the United States De partment of Agriculture to set tup of-< ficial cotton standards, and giving to him some authority over future ex changes. The act (lees not redluce the volume of speculation, which is the< crux of the whole situation. Only a small amount of actual cot- . to is handled by future exchanges. 1 T he exchanges never didl and prob ably never will function as markets 4 for the sale of real cotton. The small pro portion of reirl to fictitious cotton dealt in on the New York and New 4 Orleans Cotton Exchanges may be known, whon we consider that the to tal sales on these exchanges per ani-i num aggregates 75i,000,000 bales. There is no' way to secure accuratei figures on this subjidet, as the clear ing house of the New York Cotton Ex he Gam You to ter -22-h ative Expositi al Show, Pou in Amusemen UTRA CTION! oists--Six Big Vaude , marvelous acrobats l entertaining amuser y School Day---Fridaj ion of Beautiful Float cial Displays of Mer fitable as well as plea during Fair Week ire our HOSPITALL hange is a secretive organization, ,iving out no information whatever of lie total sales. Even brokers of the L~xchange do not know the approxi nate amount. Some light was shed )n the volume, when an auditor of the .learing house of the Exchange testi ied at a recent trial of a smaller cot on exchange in the Criminal Court of Vew York that the sales on the New York Cotton Exchange approximated 15,000,000 bales a year. Therefore, or both' the New York and New Or eans Exchanges, the estimate of 75, )00,000 baels is probably correct. Of his colossal amount hardly a half nillion bales* represents real cotton. vhich goes to show the enormity of speculation involvedl, or 99 per cent >f the trades based on "paper cotton" is against only one per cent on real ~otton for the legitimate needls of ~rade. And these exchanges act as arometers of the state of demand for ottona! Future exchanges cannot function is essential markets so long as specu ation is allowed to crowdc out legiti ntg tradling. Trho needs of the sit 2ation call for Fedleral laws to strike hirectly at speculation ,especially lbig, by compelling the seller to unsh a receipt showing that he >.wns spinnable cotton or holds an op ion on the amotint that he wishes to edcge. Free specul'ation, as nowv exists, 'auses prices to be radical, uncertain, llegitimate, up 100 points one (lay md dlown 100 the next dlay, and for sver nerve-racking to the trade. In 'ecent years, prices have covered a vide range and speculation has grown .0 such proportions that the Ex hanges hhve had to pass rules for >idding prices to fluctuate more than ~00 points from the close of one ses ion. Speculation has cost the farmer, rho is the backbone of American ommer'cial and social progress, more han fifteen billion dollars in the past 10 years. Short selling costs him rom. 25 to 40 per' cent of the profit mhis product. It is the grim reaper f the profits that he should have. There are many reasons exchanges ~hould be rigidly controlled or else ibolishedl. Prices are no more or'less han a commercial structure built on ~onfidlence. Trade activity expands md prices rise as'confidlence swells in he business outlook. Prices may be 'omparedl also to a fabric in which here aire interwoven the movements if prices in general. Operators on such lending ex ~hanges as the New York Cotton ~xchange can form a 1poo1 to break he mairket. They begin by heavy eling in such volume that the trade annot absorb it. Pricessbreak. What s the next result? Prices ini the outheirn spot markets drop. Trade mying in the dIry goodls market hesi ates. The New York Cotton Ex hange is looked upon as the barome .or of the cotton and commercial out ook. If the hammering of prices ontinues, biuying in the sp)ot and dry rood~s markets shrivels up, and buy ng disappears in allied trades. Prices n those markets sympathetically fall. 3usiness can be and is wrecked in ,this ray. The farmer i the first sufferer. His uf1'ering extnmis to the etail - Attend ounty ~3-24 y on of Agricul1 itry Show, Si ts : :ville Acts-the .Deln contortionists and ar nents. r, November 24th at' s and Decorated A.ut< chandist. during Fair sant. . Come and help [Y---Forget your care chant from whom he must necessarily buy less. The retail merchant in turn cuts down his purchase from the wholesale merchant wvho then can cels his orders to the mill. Stagna tion in trade comes. All of this be cause a group of operators in Wall Street seized the opportunity to break the cotton market. Cotton-future exchanges, on the other hand, can be useful as insurance markets. Growers owing - ton can protect its price by hedge s.. s on the exchanges, that is, by selling contracts EAGLE" For Sate at your Dealer ASK FOR THE YELLOW EAGLE PENCIL CC *EEEEEEEEEEEEEE* I MO] U gAt a Low Rai U I I have got in to I the Joint Stock Sganized under t gLoan Act, and gapplications for * property on ion. alow rate of inter I FRED LESI I FOR Pedigreed Pecans ,\ Ornamen Sourthern Grown. Speci Orders. W S. A. McKEE.,] r '1 . F.air Lure, Manu vine Show, ieade Troupe in 'ial artists. 11 A. M. There Dmobiles. Week at unus us celebrate the .s and have one against their stocks. Should a break occur in the market, they are.protect ed, as their cotton hai been sold on contract at higher prices. Future exchanges belong with race track betting, political trusts, the days of Tweed, 'houses of vice and liquor selling. The now conscience must not permit vicious speculation to wreck the fortunes of agriculture and endanger American prosperity. Future exchanges should function only as markets of insurance--The Dearborn Independent. Pencil No.4 Made En five grad.. PENCIL WITH THE RED BAND MIKADO. >MPANY, NEW YORK !JEY :e of Interest ! uch with one of I Land Banks, or he Federal Farm lan now receive loans on farm g terms and at a SNE, MANNING, S. C. SALE ,Fruit Trees and tal Stock. fat Prices dn commercial rite or Wire EBatesburg. S. C.