Cotton And Speculation

In the production of cotton this country largely retains its monopoly. Our strongest competitors are Egypt, India, and China. Our cotton crop runs between 12,000,-000 and 17,000,000 bales each season. A bale weighs about 500 pounds.

Dealing in cotton is all done on contracts calling for future delivery, and for brevity they are designated in the market reports as "futures." The quotations are divided into points, each point representing one cent, and so many points make a bale. "Spot cotton" means cotton for immediate delivery and on hand.

There are two principal cotton exchanges in this country - the New York Cotton Exchange and the New Orleans Cotton Exchange. Between them a considerable business is done. The operations on the Liverpool Cotton Exchange are closely intertwined with the dealings upon our own cotton exchanges, for Liverpool is the greatest distributing market for our enormous exports of cotton. The importance of our principal cotton exchange, which is the New York Cotton Exchange, as a center of speculation is apparent from the fact that, next to the New York Stock Exchange, its memberships command the highest price.

The Consolidated Stock Exchange

The Consolidated Stock Exchange of New York was organized as The Mining Stock Exchange in 1875. It altered its name and business in 1886. Although of far less importance than the stock exchange, it is nevertheless a secondary market of no mean proportions. By far the greater part of the trading is in securities listed upon the main exchange, and prices are based upon the quotations made there. The fact that its members make a specialty of broken lots, that is, transactions in shares less than the one hundred unit, is used as a ground for the claim that it is a serviceable institution for investors of relatively small means.

It also permits dealing in shares not listed on the main exchange, and in certain mining shares generally excluded from the other. The rules also provide for dealing in grain, petroleum, and other products. Wheat is, however, at present the only commodity actually dealt in, and this is due solely to the permission to trade in smaller lots than the produce exchange unit of 5,000 bushels.

There are over twelve hundred members, about four hundred and fifty being active. The memberships have sold in recent years at from $650 to $2,000. In general the methods of conducting business are similar to those of the larger exchange and subject to the same abuses. A form of listing requirements is prescribed, but the original listing of securities is very rarely used.

Miscellaneous Exchanges

Among the other exchanges the Boston Stock Exchange is by far the most important. The principal securities on its boards are largely mining stocks, chiefly copper. But even of them the New York Stock Exchange has absorbed a large number. The transactions there are along lines similar to those on the New York Stock Exchange.

The Chicago Stock. Exchange has an imposing structure for its home but transacts relatively little business. This exchange has never recovered from the shock it received when the Moore Brothers first took their flyer on a large scale in the stock market, using the Diamond Match Company shares as their object of manipulation. As a result of their operations, the Chicago Stock Exchange, which was then located at Dearborn and Monroe streets, was forced to close its doors for a few days to prevent a panic. All the brokers, when they tried to liquidate their Diamond Match Company stock, found there was no market upon which to sell, and the exchange stopped doing business temporarily to enable brokers to effect private settlements. The disastrous experience of the Moore Brothers spread the belief that the Chicago Stock Exchange did not provide a market big enough for large operations, from which impression it appears never to have recovered. However, a number of corporations which formerly maintained transfer offices only in New York and permitted their securities to be traded in on the New York Exchange alone, are opening offices in Chicago and adding their stocks and bonds to the Chicago Exchange.

Conditions on the Philadelphia Stock Exchange are similar but less pronounced. The principal securities, like Lehigh Valley and the Philadelphia Company, which were once the popular stocks on this exchange, have finally found their way to New York City, which seems to be the logical center for all securities, and to which they finally come when ready for the broadest market.

There are smaller exchanges in the other leading cities like Cleveland, Cincinnati, Pittsburgh, and St. Louis, but the business done on them is in small proportions and hardly worth mentioning. Even that small business is all in local securities. While all these points are important financial centers, most of the transactions in securities are made over the counters of the investment concerns.

The younger members of the Pittsburgh Stock Exchange tried, in the hope of reviving operations on a more extended scale, to introduce dealings in mining shares. For a while their plans met with partial success, but it was a dangerous innovation, as results soon proved. As most of the shares were in mining enterprises in the early development stages, the operations resulted disastrously in most cases to all who participated in the speculation, and this was mainly caused by the enthusiasm of the brokers, who, although ignorant in the first place of the fact that such securities are in most cases precarious speculations, still were desirous to give them a rousing introduction by a campaign of manipulation which ran prices up to excessive heights. The fall was sudden and disastrous. The exchange has not yet recovered from this ill-starred episode.

San Francisco has a mining exchange, where the nature of the mining business is better understood, and as the city is the natural banking center of the industry, it is also the logical market for these securities. There are smaller mining exchanges in Salt Lake City, Butte, Duluth, and Colorado Springs.

The development of the oil industry in California has brought into existence an exchange for dealings in oil stocks. Whether it is to become a permanent exchange remains to be seen. When oil was first discovered in Pennsylvania, Oil City had an oil exchange and it throve while the excitement lasted. But as an important factor it passed away with the collapse of the oil boom. Such was also the case in Beaumont, Tex., when oil was first discovered in that part of the state. It, too, went out of existence with the passing of the boom.