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JAMES R. MACCOLL, Providence, R. I.

In an address delivered a year ago to this Association, I referred to the advisability of establishing a Cotton Exchange in New England. The suggestion called forth many comments and criticisms. The latter were, to a large extent, based on a misapprehension as to the purposes and methods of such an institution. To many minds a Cotton Exchange is associated with so-called gambling in futures, and therefore, it is not wanted in New England. The object of this paper is to explain more. fully my views regarding the organization and work of an exchange adapted to the present requirements of manufacturers and merchants in this vicinity.

The best model for us to follow is the Bremen Cotton Exchange, the membership of which is composed jointly of spinners and merchants, the former being in the majority. This differs radically from the New York Exchange, in which membership and management are confined to cotton merchants, and from the Liverpool Exchange, in which spinners are admitted only as associate members. In England there has recently been much criticism of the existing arrangement, which permits only two spinners to represent their interests on the Board of Directors, while the cotton dealers have a representation of fifteen.

In Bremen the union of the two interests has been attended with marked success and satisfaction. In addresses delivered at the Bremen Congress of the European Federation in 1906, HERR PLATE, president of the Exchange, said: —

"It came to us as an inspiration that the only way to combine these two interests would be to put them together in such a way that the one should control the other. We found that there was no possibility of gaining confidence with our spinners, nor did our spinners believe there was a chance of gaining confidence with our dealers unless a system was arrived at which would produce the combination actually created in the Bremen Cotton Exchange, where spinners and dealers work together under peaceful conditions and in a most efficient manner.

"The number of spinner members in our Cotton Exchange is more than double the number of our dealers, and that will enable you more than anything else to exactly understand what we have arrived at. I confess I never heard of any combination between trade and industry similar to this, the Bremen Cotton Exchange.

"I feel certain that the more you enter into the details of the system that obtains in the Bremen Cotton Exchange, the more you will find that we have, after severe strife, arrived at a solution which seems perfect."

HERR CRAMER, vice president of the Exchange, said: —

"Thus it came about that the industry also strongly desired the establishment of a large cotton market in Bremen, and in 1886 the Bremen Cotton Exchange was founded.

"The close union between cotton merchant and spinner which was created by the Cotton Exchange was a means of placing the cotton trade on quite a different basis."

An extract from a recent report of the Bremen Exchange also emphasizes the same feature:

"The following figures are a striking proof of the harmonious and loyal co-operation of both branches of the trade.

"Whilst in the year previous to the joining of spinners to the Bremen Cotton Exchauge 430,000 bales were imported, and 151,000 bales arbitrated, in the following year 1887, the import rose to 658,000 bales and 300,000 bales were arbitrated. Ten years later, 1897, the import amounted to 1,400,000 bales and-1,090,000 were arbitrated."

In the year 1907 the import reached 2,141,754 bales, and 2,396,128 bales were arbitrated, the difference we presume being. accounted for by imports of the previous year receiving arbitration in this period.

The first point that I make is that we need in New England a Cotton Exchange in which merchants and manufacturers shall work unitedly for the development of the industry, and together shall establish rules of trading, and settle differences that may arise. Its directorate should be composed of representative men from the leading cotton centers, such as Boston, Providence, New Bedford, Fall River, Lawrence, Lowell and Manchester.

Take for example the question of tare. The Arkwright Club, composed of mill treasurers, has endeavored to establish a 22-pound tare standard. Some of its members buy on this basis, others on 24-pounds tare, and others without any restriction regarding tare. Some cotton merchants and brokers acknowledge the 22-pounds standard as equitable, and others. say they never heard of such a requirement. A ruling regarding tare, decided upon by a directorate such as I have described, would be official and final as a basis for trading in New England. There are many other questions that need to be settled in the

same way.

In a recent letter Mr. H. W. MACALISTER, chairman of the European International Committee on Cotton Exchange Contracts, says:

"I should like very much if we as a trade (every nation and all of us) would agree to arrange to buy cotton upon one principle, viz.: net weight of cotton delivered. If this could be arranged it would be the best incentive possible to improvement in covering and pressing cotton."

The influence of a New England Exchange in bringing about this desirable feature of buying on net weight, would be very marked in co-operation with the European Federation.

The Bremen Exchange has no trading in futures such as exists in New York, New Orleans and Liverpool. In these markets the grade "middling uplands" is bought and sold, but deliveries may be made of many other grades at differences fixed either annually as in New York, or at time of delivery, as in New Orleans and Liverpool. The method which prevails in

Bremen is that the exchange establishes fixed standards of grade and staple, and the spinners purchase for present or future delivery the actual cotton that they need and use in their mills. When the coton arrives it is sampled and arbitrated by exchange officials to determine whether the delivery equals the standard in grade and staple. If inferior to the standard bought, the difference in value is allowed, and also if the deficiency is important, a penalty is imposed on the shipper. On this matter HERR CRAMER, says:

"The fine may under certain circumstances even be as high as 3/4 cent per half kilo, or approximate pound. Of course, the trade is not in a position to stand these heavy fines often or even occasionally. Consequently, every merchant will take good care not to have any fine to pay, and the effect of the clause is that the spinner receives as a rule his proper quality."

It is useless to advocate the establishment of a system that would not be mutually advantageous to shippers, merchants, brokers and spinners. Allow me, therefore, to elucidate this point. The Southern dealer or shipper would benefit, because in quoting prices, he would know that he and his competitor for the order were both quoting for an exactly understood standard. At present, mills differ in their idea of grade and staple, and many an order is lost by a dealer because he has in mind when quoting, a better grade or staple than the mill requires, or than his competitor is proposing to deliver. Then again the exchange arbitration necessitates a fair delivery. First class shippers know that they suffer by the quotations of irresponsible parties, who do not intend to deliver cotton fully up to what they sell. The capable and honest trader is thus protected and rewarded.

The broker or merchant shares with the shipper these advantages and also is saved a vast amount of trouble and risk.

From the spinners' standpoint, there would be great benefit in a thorough system as regards standards and arbitration. There is a wide difference in the methods now prevailing at different mills in examining cotton received. A treasurer

recently told me that he used 30,000 bales annually, and personally passed every bale. In some mills a competent classer is employed. In other mills the superintendent or the overseer of carding is relied upon to pass the cotton, and in many mills I am informed that there is no examination worthy of the name. A few concerns send their cotton to the New York Exchange to be classed. It is generally recognized that New York arbitration is not adapted to so called "staple" cottons. Last year the New York Cotton Exchange classed for spinners only 15,000 bales, which shows that it is not utilized to a large extent for this purpose. The lack of competent classification must undoubtedly be detrimental to the production of many mills. The adjustment of claims with brokers and shippers is by no means an easy task, and generally is in the nature of a compromise. The Bremen system provides for arbitration by two sworn classers, with an appeal to a committee of members of the Exchange. In my judgment there is a great advantage in two men working together and comparing their findings on each bale as they proceed. Every man who has tried to classify cotton will, I think, agree with me in this opinion. So well is the work of the sworn classers done at Bremen that of 2,396,128 bales arbitrated in the year 1907, an appeal was made on only 208,402 bales, or less than nine per cent. The Committee of Appeal sustained the sworn classers' judgment on 96,835 bales, and reduced or increased the allowance on 111,567 bales.

The cost of classifying in Bremen is about five cents per bale, and in New York, ten cents per bale. For stapling .64 cents per bale is charged in Bremen. Suppose that it cost a mill using 10,000 bales of cotton annually, $1,000 to have its cotton classified, would this amount not be far more than recovered by the saving of the time of its own men, and by the improvement in its product through the uniformity and the maintenance of quality of the cotton used.

Recent years have witnessed remarkable changes in the marketing of the great Southern crop The increased wealth in the South and the influence of the Cotton Growing Associa

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