v^^ MIlLE. *tat8 (College of Agriculture 3^t (Jornell IninerattH Sltbrarg Cornell University Library HD9075.M43 1915 Cotton trade guide and student's manual; 3 1924 013 862 960 Copyright, 1915 By T. S. Miller, Sr. T. S. MILLER Author and Educator; former Instructor in Cotton Classing A. & M. College of Texas, now teacher in the Department of Cotton Marketing in the same Institution— Author of "The x\merican Cotton Sj'Stem" and other works. DEDICATED to MY WIFE lira 3tttCi JHiller as a TOKEN OF LOVE AND AFFECTION and For Her Valuable Assistance in Compiling this Work PREFACE THIS VOLUME is written with a view of placing before the Student reliable data instructing him in the art of COTTON GRADING, and to acquaint him with the present System under which our American Crop is graded for the grower and consumer. Our present system of handling cotton is a complex and expensive one; and while its development to the point we have it today is the result of practical experience through a series of years, it may be stated that its foundation began with the Cotton Buyers of Europe ; and since the organiza- tion of the Cotton Exchanges both there and in America, their membership, and independent large Buyers, with the aid of Mill Rules and Rules of Mill Associations, have es- tablished the System now extant, of which this work treats.' Knowing that Imperfections exist in this System, business prudence would suggest that improvements should follow; but before they can be made, it is conceded that the present System must be understood. This treatise is not exhaustive to the last degree, but covers the subject clearly and in such concise manner as can be compassed in one volume appropriately arranged as a Text-Book both 'for the Trade and our School System. Reference is frequently made to the Cotton Exchanges, because they stand at the head of our present System of marketing cotton, by and through which we get our prices to buy and sell Cotton. It is not the purpose of this work to endorse or condemn those Exchanges, or to exalt or condemn any System for buying and selling Cotton, but only to refer to the Ex- changes as component parts of a certain System under which we operate, and to familiarize, the Student with it. The book is so divided into Chapters and Sections as to vi Preface lead from one subject to another by easy steps, and by such methods to gradually advance the Student in the knowledge of the subject. Cotton calculations are so intimately connected with cot- ton transactions that it has been thought advisable to insert a number of problems of practical utility that come into the daily life of the Cotton Dealer. Every problem is orig- inal, and deals directly with some form of cotton transac- tion, especially those required in averaging prices and Grades, and translating foreign quotations to American values. In mechanical construction, its pedagogical features have been designed for adaptability in giving instruction in this new course in the school room. The data given is based upon an extensive research and the Author's practical experience of fifteen years service in the Trade, in connection with information given by men who have been or are now extensively engaged in some of the leading lines connected with the cotton industry, and whose ability to impart such information can not be ques- tioned. T. S. MILLER, SR. Flat, Texas, June, 1915. INTRODUCTION COTTON. THE. COTTON PLANT THE DEVELOPMENT of the cotton plant to its present beautiful, symmetrical form, laden with one of Nature's most valued products known to mankind, is a study full of interest and wonder. From its original type in the remote past, development and improvement have gone hand-in-hand with the achieve- ments of the scientist and practical grower, whose efforts have given us the different types we now know. Being semi-tropical in character, its habitat is confined to parts of the North and South Temperate Zones, where soil and climatic conditions are conducive to its most per- fect growth. The tropics are well adapted for producing a vigorous plant, but insect depredation is too severe for its successful culture in that climate, except in Egypt and Southern India. The fibers enfolding the seed of this plant constitute the cotton of commerce. IMPORTANT FACTOR AS A FACTOR in the daily life of the Southern Farmer, there is none more important to him than the culture and production of Cotton. To its production he looks for his chief source of revenue, a bulwark to protect him in meeting the claims of his cred- itors who have indulged him. It pays his taxes, buys his home, schools his children, builds the school house, erects the church, and gives to him .financial strength. It improves the highways, builds the viii. Introduction towns and cities, encourages manufacturing, stimulates the railroads, induces immigration, increases commercialism, emphasizes a New South and leads to a hoped-for higher civilization. On it the Grower stands as his Gibraltar, and to it he looks for the future destiny on which he rests his faith. History records no parallel in the growth of any agricul- tural commodity equal to the increase shown in the pro- duction of cotton in the South since its advent in the com- mercial world. Its uses have broadened as production increased until it has belted the earth and covered the great Zones to which it is adapted. Confined to a narrow limit on the southern border of the United States, restricted in its area of production in the Western World, this area still produces 75 per cent of the world's growth from which 66 2-3 per cent finds a mar- ket in other climes. Having grown to be the largest producer of cotton in the world, the Southern cotton farmer enjoys a distinction not realized by any other engaged in any line of agricultural pursuit. Having this advantage and distinction has inspired him for many years with the hope of being able to dictate the price for which his cotton should be sold; but when offer- ing it for sale, he finds he is confronted with a System for marketing, the control of which rests entirely in the hands of those who buy; and since the dawn of cotton culture, the buying element has always been the dominant factor. This purchasing element, headed by the Cotton Ex- changes of the world, has established a System for buying through which every bale finds a Market. Connected with the Exchanges are found Spinners, Bankers, Exporters, Importers, Growers, Manufacturers and Speculators. This System is founded on theory and practical expe- rience. Introduction ix Intelligence and an educated membership act through co-operative effort and understanding, guided and governed by prescribed Rules of procedure in all transactions. The South's monopoly of increased cotton production has been followed with increased world consumption, and her millions of bales arising from the earth, magic like, annu- ally gravitate into the hands of these purchasers as rapidly as the Trade will take them. To this System the Grower looks with daily inquisitive anxiety for a price for his commodity that will reflect a financial credit for his labor. He lives in hope and works with enthusiasm. The Foreign and Domestic Spinners familiarize them- selves with the art of Cotton Grading for self-protection; every Exporter and Importer, for a like purpose, masters this art; the large and small Buyers alike, the world over, as a prerequisite for success in their business, learn the Grades of cotton. No Buyer dare enter the Market to purchase a single bale of cotton without equipping himself with a knowledge of the Grades of cotton. As an essential factor, it can not be avoided. For more than a century Cotton Growers have thrown hundreds of millions of bales of cotton upon the Markets of the world, but for some cause have never seen the im- portance of learning the quality of the cotton they sell, and market it as freely today without that knowledge as if in full possession of it. In the light of an acquired technical knowledge, this System takes the Grower's cotton ; in the darkness of indif- ference the Grower surrenders the product of his labor. For the Grower, the Dealer, the Cotton Student and the Youth in school, this volume is written. To its pages they may refer with confidence that they will find information covering practically every point in con- nection with the Trade. BOOK I. COTTON CLASSING A MANUAL FOR INSTRUCTION FOUNDED UPON STUDY AND EXPERIENCE. A WOODEN SCREW PRESS. A silent sentinel of the past, emphasizing man's original efforts to produce a commercial cotton bale, the form of which was exactly as that made today on the best improved gin Press, and a package equal in all respects. It has sent its hundreds of millions of bales, hugged with steel and covered with jute, to every nation and clime, receiving the welcome of the King and Peasant alike. Courtesy Lummus Gin Co., Columbus, Ga. CHAPTER I SECTION I— COTTON CLASSIFICATION, GENERAL. CAUSES FOR COTTON GRADES 1. Cotton ripens in a period of four months, more or less, according to the season, varying according to latitude within the cotton belt, usually beginning about August 1st, and eniJing with the first killing frost. The picking con- tinues occasionally until March. To say that cotton ripens in a period of four months, signifies that the time from the opening of the first bolls to the last, before the appearance of frost, may consume this stated time. From the time of the opening of the first bolls, the cotton remains green and continues growing, unless interrupted by drouth or insect depredation, until stopped by attacks of cold sufficient to destroy vegetation. While some cotton is ripe and opening, on the same stalk may be seen young forms, blooms and small growing bolls approaching ma- turity. 2. The early maturing cotton gathered before any rain has fallen gives the better or high quality, while that re- maining exposed to the vicissitudes of the weather has the stamp of inferiority indelibly placed upon it. 3. Winds, rain and sunshine so change the appearance of cotton while exposed to their influences in the fields as to originate a number of qualities of it. From these causes originates the necessity for designating each number or quality by a certain name, as "Class," "Type" or "Grade," as "Middling Class," a "good Type of cotton," or "High" or "Low" Grade, etc. 4. Weather influences affect the grade of cotton by causing discolorations, such as "spots," "stains," "tinges" 2 COTTON CLASSING and bleaching. Cotton is stained by coloring matter from newly opened bolls, leaves, or squares, after recent rains, or as the result of the action of frost upon half and fully- matured bolls before opening; such discolorations are large- ly eliminated after exposure to the bleaching effects of sun- shine for a few days, except frost discolorations, but the lustrous appearance of cotton, known as "bloom," which is seen before rainfall, will never be restored, though the cotton be left to bleach indefinitely in the sunlight. 5. All cotton bolls are enveloped in partial coverings of triangular-trifoliate forms, known as "squares," and when the bolls are ripe and burst, exposing the white, fluffy cot- ton protruding from the narrow limits of its former prison cell, the squares are dead and easily crumbled, and it is quite difficult to pick the cotton from the bolls without get- ting a portion or all of the dried, dead squares in small fragmentary particles into the cotton. When the leaves of .the cotton plant die, from drouth, frost, or any cause, they are easily pulverized, and particles of these dead leaves often get into the cotton to a greater or less extent, gov- erned by the care or carelessness of the picker. These leaf fragments, in addition to those of the squares, affect the quality of the cotton gathered by lowering its gradation. 6. Each pod or boll of cotton is composed of 3 to 5 parts, known as "locks;" each lock contains from 5 to 9 seed. These fiber-covered seed, composing the heavy part of the field cotton, naturally cause the locks to become pendant from the bolls, and finally fall to the ground by reason of their own weight. Sometimes thie wind in its action on the hanging locks will cause them to become elongated to the extent of 6 to 8 inches, and frequently twists them about the adjacent limbs of the cotton plant as if wound there by hand. When so confined to the limbs, more or less dead leaves attach themselves to this cotton, and when carelessly gathered it is not infrequent that the stem and leaf follow the cotton into the picker's sack or basket. After frost, all the leaves of the cotton plant fall to the ground, and if the COTTON CLASSING 3 growth has been generous and foliage excessive, the ground is covered with dead leaves. Cotton falling from the bolls to the ground finds lodgment among these leaves, to which its fibers adhere with tenacity. Rains beat dirt into such exposed cotton, and often pickers will gather it from the ground, exercising no care to separate the leaf, and cannot take away the dirt. Open bolls hanging near the earth be- come covered with dirt. Such character of cotton consti- tutes the Lower Grade quality. 7. Many ginneries are not sufficiently equipped with the necessary machinery for cleaning such trashy, dirty cotton, and quite often wet and damp cotton is presented to them for ginning, which can not be perfectly done ; but the pass- age of dry cotton through the ginneries causes it to lose a large percentage of its foreign substance, and while all is not taken therefrom, the remainder is sawed into small fragments and exists as a factor to be considered in passing upon a sample for gradation. 8. Gin saws operating upon cotton that is damp, yet suf- ficiently dry to pass the ribs of the machine, will cut the fibers badly, and produce a class of cotton designated as "gin cut." Dry cotton will be "gin cut" if the machinery is run at too high speed.^ 9. Fibers of damp cotton apparently have a great affin- ity one for another, and when much moisture exists in the cotton, it will be drawn by the gin saws through the gin ribs in unified quantities, exhibiting the appearance of tufts. Gin brushes taking the fibers from the saws can not sepa- rate these tufts, and they enter the baled cotton as taken from the saws. These tufts containing fibers of very un- even . short lengths are known by the cotton grader as "naps" or "neps." Twisted or stringy cotton results from damp cotton passing through the machinery. 10. Carelessness in operating gin machinery often leads to the accumulation of quantities of cotton in and about the iThis statement is questioned, as some authorities deny it. 4 COTTON CLASSING bearings of the gin saws and brush shafts, also in any re- cess where loose cotton may accumulate. This slow, grad- ual accruement gives sufficient time for deposits of dust, dirt, small particles of trash, oil, etc., to become admixed with the cotton. If not removed by the operator, an excess portion of this accumulated inferior cotton will finally be thrown off to find lodgment in the bale being formed. Some- times operators in taking away this deposit of dirt and cot- ton, will thoughtlessly throw it into the cotton, giving little heed as to what the results might be. This character of cotton is entirely worthless, and im- pairs the value of the cotton with which it becomes mixed, if in sufficient quantity to be considered. It is recognized by the cotton trade as "gin falls," and usually appears in lumps or "pockets." These "gin falls" are not as frequently found in cotton, however, as other contaminating sub- stances that impair the quality of it. SECTION II GRADE NAMES, AS DEFINED BY COTTON EXCHANGES To determine with some degree of accuracy any partic- ular kind of cotton that may require the judgment of an operator, it is necessary that each class as described in the preceding should bear some name (or number) by which it may be easily known for purposes of identification and valuation, and to facilitate handling. They are divided into Fulli Half and Quarter Grades. Classification can be well defined with the exception of the Quarter Grades. TABLE I. FULL GRADES Fair Low Middling Middling Fair Good Ordinary Good Middling Ordinary Middling Low Ordinary COTTON CLASSING 5 Those grades falling midway between the "Full" Grades are known as "Half" Grades. The qualification distinguish- ing them is shown by the lesser amount of foreign sub- stances contained in the cotton than that exhibited in the first Full Grade below. The grade name remains the same, but the adjective "Strict," precedes the name as a term ap- plied for this Class of cotton. They are fairly well defined. TABLE II HALF GRADES Strict Middling Fair Strict Low Middling Strict Good Middling Strict Good Ordinary Strict Middling Strict Ordinary In addition to the Full and Half Grades, there are others designated as "Quarter" Grades^ and referred to as 3"Fully" and "Barely." They come between the Full and Half Grade cottons. As with the "Stricts," the name for the primary Grade remains, with the words "Fully" and "Barely" prefixed. They are as follows : TABLE III QUARTER GRADES Barely Middling Fair Barely Middling Fully Good Middling Fully Low Middling Barely Good Middling Barely Low Middling Fully Middling Fully Good Ordinary These Grades are measured by the excess of foreign sub- stances contained in them compared with the next Half Grade above, or diminution of such substances in them, zRecognized by the Trade as "splits" because of this Grade being a dividing line between Full and Half Grades. 3Se& page 46, "Fully" and "Barely." 6 COTTON CLASSING compared with the next Half Grade below. These Grades are more difficult to define. For convenience, the Full, Half and Quarter Grades* are arranged in tabular form for ready reference, and to show the relative position each occupies to its nearest approxi- mate Grade, also its comparative value to Middling by rea- son of this position. TABLE IV FULL, HALF AND QUARTER GRADES' FAIR Strict Middling Fair MIDDLING FAIR Barely Middling Fair Strict Good Middling\ Fully Good Middling GOOD MIDDLING Barely Good Middling Strict Middling Fully Middling MIDDLING Barely Middling Strict Low Middling Fully Low Middling LOW MIDDLING Barely Low Middling Strict Good Ordinary ^ GOOD ORDINARY Strict Ordinary ORDINARY LOW ORDINARY FAIR TYPES MIDDLING TYPES ORDINARY TYPES *See Appendix. sAll tlie Grades, Fair to Good Ordinary, inclusive, constitute the N. y. Cotton Exchange tenderable list for white cotton, as adopted September 11, 1912. The Grades, Ordinary, Strict Ordinary and Low Ordinary are recognized and accepted by the Trade. Barely Middling Fair is not in N. Y. list. It is rarely seen and a doubtful grade. COTTON CLASSING " TINGES AND STAINS The Tinges and Stains are qualifying terms, differen- tiating this character of cotton from lists of white Grades. Like the use of the words "Strict," "Fully" and "Barely," they are expressive of that particular Class of cotton car- rying discolorations, more accurately defined by the use of these words. The Tinges and Stains have reference to the shades of discoloration produced from stains received from the bolls and leaves after rainfalls, or from the action of frost on im- mature cotton in the bolls before they open. A Tinge produced by such process, is the same in color and character as a Stain, but much lighter in its shade. A Stain may be so deep as to give the effect of having been dyed in a solution to produce a reddish brown color, re- ferred to as "heavy Stain," or so light in appearance as to fade into a Tinge. The shading of a Tinge to a heavier coloring carries it near to a Stain, and to determine when this coloring of a Tinge should end, and that of a Stain begin, has been and is a subject for contention as to when and where the .line of demarcation should be drawn. Leading members of the Trade and Expert Classers affirm that this distinction can be made easily, while others equally high in the technical understanding of cotton classification, say that it is difficult to draw the dividing line. Tinges and Stains are the same in character, if the fiber of the one is of equal length and strength as the other — differing only in the degree of color that qualifies them. Rains beating upon cotton exposed to the soil, or on lower hanging limbs, will discolor the cotton to the color of the ground on which the cotton is grown — thus it is "blue," "smoky" or whatever color the soil imparts to it. It is not a Tinge or Stain, but is designated as "off color." Tinges and Stains stand in a class to themselves, and are 8 COTTON CLASSING recognized as distinct cottons from the other Grades. They are graded as the white cottons with respect to the foreign matter contained in them, with the extent of the coloring expressed by the word "tinge" or "stain" for more accu- rate description. Instead of prefixing to the grade name of cotton, as in the case of "Strict," "Fully" or "Barely," these words, "Tinge" and "Stain," follow the Grade name. In a relative way, tinged cotton implies a character of cotton better in quality than stained, and may be found as a qualifying consideration in Grades of cotton as high in class as Strict Good Middling ; while stained cotton is not admis- sible to Grades higher than that expressed as Middling Stained. Note. — The Ne\7 York Cotton Exchange admits but one Grade of Stained to its Official List, and that is Middling Stained. The New Orleans Cotton Exchange recognizes one Grade of Stained cotton, and does not receive any cotton on its Contracts below Middling Stained, nor any of the Tinges below Low Middling. The New York Cotton Exchange admits to its list of Contract Cotton both Tinges and Stains, but not below Low Middling Tinged or Middling Stained, as follows : TABLE V. Strict Good Middling Tingeds Good Midding Tinged Strict Midding Tinged Middling Tinged Strict Low Middling Tinged Low Middling Tinged Middling Stained MEMORIZE GRADES Having learned the causes for variable Classes of cotton of the same Type, and the different Grade names for these Classes, it is suggested that the student familiarize him- self with them and memorize the entire list, before at- tempting to master the art of classification of cotton. sNew York Cotton Exchange classification, Const. & By-Laws, Ed. 1906, Sec. 93, p. 75, and Ed. 1910, p. 38. COTTON CLASSING 9 The study should give a two-fold, result: An accurate knowledge of the names of the different Grades, the relative position the one takes with the other, and the comparative value with reference to Middling of the adjacent Grades above and below. Note. — The Grades Strict Good Middling, Good Middling, Strict Mid- dling, Middling, Strict Low Middling, Low Middling, and Strict Good Ordinary, cover approximately 90 per cent of all the cotton handled in America. Excluding the Grades Strict Good Middling and Strict Good Ordi- nary, the intervening ones will represent fully 75 per cent of the American cotton entering comimiercial channels annually, excepting the occurrence of unusual weather conditions, that occasionally inflict a greater or less damage to cotton exposed in the field. SECTION III GRADE CAUSES CONSIDERED Early maturing cotton, gathered before being touched by rain or dew, gives the better or High Grade qualities, dis- tinguished from other cottons with comparative ease. Rain, dew, hail, and winds attacking cotton exposed in the fields greatly change its physical appearance and quality. Depredating insects and worms in their ravages on the leaves and unopened bolls of cotton affect its fiber by weak- ening plant vitality, resulting in short or weak staple, or by direct attack on the unripe fruit, cut the immature fibers and cause discolorations. These causes affecting cotton produce the Stained, Tinged and Low Grades, easily read by the Cotton Classer in the exercise of his technical skill. There being no definite mechanical rule by which cotton can be classed, its quality is determined by the judgment of the individual, whose familiarity with some Standard mentally guides him in the execution of his work. If in doubt, he can refer to his Standard Types for comparison. 10 COTTON CLASSING In passing on a sample of cotton for gradation, it can not be said that it must be opened two, three or more times ; it can not be said that there must be three, four or five pieces of large leaf, (say 1-4 inch in diameter) and ten, fifteen or twenty specks of small leaf, to make it a certain Grade, in addition to the motes, hulls, dirt, sand, etc. All classers have a somewhat definite idea as to what con- stitutes a particular Grade of cotton, based upon what has been taught them, or upon some Standard, and by prac- tical experience have acquired the art of classification. Some Classers become very confirmed in their judgment, and unyielding in matters of controversy when their classi- fication is questioned. Absence of harmony in the Standards formerly estab- lished by the different Exchanges, and the similarity of Grades that approach each other so nearly in quality, are causes contributive to the diversity of opinions among. Classers of cotton. It being rare that two Grades of cotton are identically the same in every particular, then it follows that one Grade approaches another so nearly in appearance as to be called the same in character, and on these resemblances opinions differ as to what definite Class of cotton the Grade should be assigned; one saying it should be one thing, another, confirmed in his opinion, says it should be something else. In the main, there is a general agreement between expe- rienced Cotton Classers as to what constitutes a specific Grade of cotton, more particularly among those accustomed to handling a certain character of cotton; as, for instance, Classers familiar with and experienced in classing Texas cottons, vary but little in their accustomed line of work, nor are the discrepancies wide between theftn as Classers of Texas cotton. Other Texas Classers, equally familiar with the same kinds of cotton, if requested to classify North Carolina or Georgia cotton, without referring to Type or Sample, might find themselves somewhat at sea on first COTTON CLASSING 11 attempt. Similarly, the Carolina or Georgia Classer would find his technical skill drawn into question in attempting to classify the Texas cottons upon his first observance of them, and until accustomed to their qualities and character- istics, as compared with the cottons with which he is fa- miliar, would doubt his own ability to classify them, for a time at least. Weather influences so change the appearance of cotton while exposed in the fields as to produce many qualities or Grades, and to judge these Grades properly and assign them in the list of gradation, is the duty of the Classer. Owing to the fact that cotton can not be classed math- ematically and mechanically correct, and in the absence of any rule defining gradation beyond that of standardization, it follows that expert Classers will sometimes differ in their results in passing judgment on certain samples of cotton, though acquainted with the Standard guiding their opera- tions. Particularly will these differences arise in deter- mining the Fully and Barely cottons, and occasionally dif- ferences will occur in comparison of the gradation for the Strict or Half Grades. Classers not only differ with each other occasionally in taking up lists of cotton, but find by experience in looking over a list of samples the second time, that the results ob- tained do not exactly duplicate the first classification. The second effort may show a difference of only one or two Points,^ or it may increase to four or five. With the "Middling Base"^ and a Standard for guid- ance, careful Classers can approximate almost to an ex- actness. The fact that duplicate gradation may slightly vary in final out-turn as made by an expert Classer, does not justify the conclusion that the classification so made is incorrect, or not sufficient for practical Trade requirements. ^Treated further in Book II. sSee Middling, pp. 6, 28, 38. 12 COTTON CLASSING All good Classers will raise or lower a Grade to place it properly in the list. If taking up cotton with the Quarter Grades* excluded from the list but recognized in the Grade, they will take, for illustration, a "full style Middling" for a Middling; the next "full style Middling," for a Strict Middling, and in this way "give and take," equalizing the gradation. They follow this procedure all the way through the list on all the Grades. If they keep no record of each bale as to how they raised or lowered it in the first classification, and fail to raise and lower the same identical bales in the second gradation, the results will vary, yet the gradation will be as accurate as could be made in both instances so far as each sample is concerned, as measured in the examination. This is due to the fact that an experienced Classer knows every Grade will not be "clear cut" or exact in "style," and as the range in gradation must be recognized, he makes allowance for these divergences, as explained. SUBSTANCES AFFECTING GRADATION There being no mechanical means by which cotton can be graded, something, then, must guide the operator or in- quirer in determining what makes Grades or Classes of cotton. The Cotton Exchanges of the world in connection with the Trade, stipulates that cotton shall be graded as to its superficial appearances; which, interpreted, means that anything and everything in cotton that is not cotton, shall be considered in designating its Grade. The Cotton Classer looks for broken leaf, large and small; stems; broken seed; motes (immature seed) ; dirt; gin cuts; naps and discoloration^. These are the substances that en- ter into all Grades in small or large quantities — ^the smaller the quantity, the better the Grade." As will be noted else- 9See Fully and Barely, Book I, p. 48. lOSee Grades with brief descriptions, p. 27. COTTON CLASSING 13 where, the Staple of the cotton in gradation is not an item for consideration, except under certain stipulations and re- quirements.^^ It has been argued by some Classers that if in one pound of clean cotton the gin throws the fragments of one dead cotton leaf, the resulting gradation would be Good Mid- dling; two leaves would give Strict Middling; three, Mid- dling, and so forth. While this illustration can not be used as a definite guide in making an exact classification, it illustrates nicely an idea of the comparative amount of leaf -trash that might be admitted as a proportion required to make the different Grades mentioned, and to that extent serve as a guide to the Classer. Hurried Harvesting. — In their efforts to clear the fields of open cotton ready for the pickers, many Growers — ^prac- tically all of them — in their rush to save it, will enter the fields soon after rains have fallen, or before the dews have gone, gather the cotton as rapidly as the hands can take it from the plants, regardless of the amount of moisture in it, and in this condition deliver it to the ginnery. If an excessive amount of water is contained in the cot- ton it goes to the press in that condition, producing a "wet pac^" bale. The early picked cotton, damp with dew, is the first weighed into the wagon box or cotton bin, which, added to the dry cotton picked afterwards, makes the complete bale. Should the damp cotton pass through the ginnery in such condition, and appear on one side of the bale, the moisture will soon escape under favorable weather conditions, and the whole bale enters the Trade as a dry one, but evidence remains showing "wet ginning." Gin saws acting on damp or wet cotton remove but little of its foreign substances, produce "gin cuts," and neces- sarily forms a Grade of comparatively "Low" cotton. iiSee "Merit Values," p. 78. MB— 2 14 COTTON CLASSING Cotton getting into the ginneries in a damp condition gives cause for serious objections by Buyers who must handle it, as such cotton is discounted in price from dry cotton when purchased. Leaks in steam pipes and water pipes sometimes give an excess of water to a bale of cotton, subjecting it to Dis- counts. To secure the best results in getting the highest qualities of cotton, none should be allowed to enter the ginneries before being thoroughly dried. Leaf, stems and dirt are easily separated from dry cotton, but adhere with tenacity to damp fibers. Bale Formation. — The tendency of the times is towards gin plants of four, six, and eight or more gin stands in each plant. The "breasts" of all gin stands hold a quantity of cotton called a "roll." After ginning the first bale of the season, this roll is held in the gin stand, going out only as a bale is formed. When a gin stand gives up its roll in the formation of a bale, it receives another from the bale following, repeating the operation for each and every bale ginned throughout the season. A gin roll going out falls on one side of the bale being formed, and if the roll of cotton be of a different quality from that passing through the machinery, the bale will have on its surfaces two different characters of cotton, and will be what is called a "two-sided" bale. A ginnery operating several gin stands, will carry an equal number of rolls ; the more rolls the greater the quan- tity of cotton to fall in the press on one side of the bale. If it be identical in all respects to the cotton received from the Grower's wagon, the bale will be of the same Class throughout, but if not, a "plate," represented by the roll cotton of more or less thickness, will appear on one side of the bale, creating the necessity for cutting the bale on both sides to determine this fact, when sampled for purchase. COTTON CLASSING 16 Other factors may cause "two-sided" bales, as when part of a bale is gathered before, and part after rainfalls ; or if the bale be made up from an area of 5, 6, 8 or more acres, a part of which cotton has bleached in the sun and re- ceived trash and dirt from the action of winds, and the other part made up from cotton recently opened. The differences in appearance may be slight or more definitely marked. Bales can be made uniform throughout if the seed cotton be "fed" carefully into the pneumatic elevators carrying it to the gin stands. Assuming a Grower has a bale of seed cotton in his wagon bed, one half of which was gathered before, and one half after rain had fallen on it while exposed in the field, it is evident the bale made from the two cottons in the wagon bed will show two different qualities in the bale, or a "two- sided" bale. This can be overcome by the Grower mixing his good and bad seed cotton before delivering to the elevator, by begin- ning at one end of the wagon box, at the top, and gradually "feeding" the cotton down to the bottom of the bed, continu- ing in this way until all the cotton is taken from the wagon and delivered to the elevator. Seed cotton composed of mixed lots of various pickings can be made entirely uniform in the bales if the above directions for delivery to the ele- vator be observed. Let it be stated a Grower's bale of seed cotton is com- posed of one half picked before and one half after rainfall as stated, that the first half will produce Good Middling and the second half Middling, only, resulting in the Grower get- ting Middling prices for it, for, by the rules of the Cotton Exchanges and the practice of the Trade, the "low" side of the bale governs its sale and purchase. The Good Middling goes at Middling price, but if such seed cotton be delivered to the elevators equally mixed, the resulting bale will be Strict Middling in quality, for which the Grower will re- ceive a premium over Middling. 16 COTTON CLASSING Belt distributers as a part of a ginnery's equipment will greatly facilitate the mixing operation of the seed cotton before ginning. The foregoing statement does not eliminate the idea that the "roll" from several gin stands may not be found compos- ing a "plate" or thin layer of cotton on one side of the bale, as it is often possible to find such "rolls" of cotton differ- ing in character from the bale in actual formation. CUTTING AND DRAWING SAMPLES FROM A BALE To draw a sample of cotton from a bale requires no spe- cial art after the operator has learned how, and knows the importance of correct sampling. The sample should be large enough to give an index as to the character of cotton in the bale, and each sample ade- quately does this in the beginning of the season when the first cottons are gathered, before touched by rain; but as the season advances and rains and winds occur, the excess of damaged cottons that follow, often gives cause for two or more Grades of cotton appearing in the same bale under present gin methods. When such is the case, neither a large nor a small saniple will give the true quality of the cotton in the bale, when, to proceed correctly, one should draw a sample from both sides of it. The cut -should be semi-circular in form, made with a sharp knife, and deep enough to cut through at least an inch of cotton in depth. With the fingers digging into the opposite end of the cut from the Sampler, he should grad- ually work them under the cotton as he draws his hands to- wards himself, at the same time tearing it up until he has a sufficiently large sample loosened on one side of the cut. Beginning again in the cut at the opposite side from him- self, he should draw the sample as he brings his hands for- ward. The cotton drawn should be a sample of about the same thickness all the way across the cut. Keep the sam- ple intact, that is, do not draw small quantities repeatedly and attempt to make up a sample by combining them. COTTON CLASSING 17 18 COTTON CLASSING If carefully drawn, the sample can be opened with ease and examined readily as to its imperfections; but if not, it will be a poor guide to the quality of cotton in the bale. Before drawing the sample, after laying back the flap of cut bagging, the appearance of the cotton that lies immedi- ately under the flap should be noted for any damage, stain, dirt or sand, and this surface cotton should be removed before drawing the sample, if any of these imperfections appear. In detaching the sample, the operation can be performed often by the use of the steel hook used in handling the bales. Drawn samples that are to be preserved should be rolled tightly and placed in bags, or securely wrapped in papers especially prepared for such purpose. SECTION IV WORKING TYPES Note to Instbuctobs. — The following' explanation for students' class work are suggestive ideas only, inserted as a form of guide, and while thought to be practical and instructive, your ingenuity may be exercised in any way you think advisable to attain the desired results; DISPLAYING SAMPLES FOE GRADATION WORK Before attempting Gradation, a supply of samples cov- ering the entire list of Commercial Grades should be had, or as near a full list as can be conveniently secured, for Gra- dation can not be taught without seeing the actual cotton. No description alone can acquaint the student. In securing this list, additions must be made to the Gov- ernment's nine Grades. Above the Government's list^^ will be Strict Middling Fair and Fair, two Grades rarely seen in the Market, and diffi- cult to obtain. If omitted from the list, classification work i2See p. 27, also p. 69. COTTON CLASSING 19 will be interfered with but little. They can be fairly well explained by the use of Middling Fair as a parallel type for explanation. The student should not only see the samples, but have an opportunity to hold them in his hands. The touch is very essential in determining the character of cotton as regards harshness or silky texture ; to determine whether hard and wiry; course or fine; weak or strong staple; its admixture with such substances as dirt, sand, broken seed, motes, etc. Written or printed descriptions alone cannot teach Gra- dation ; neither can a knowledge of Gradation alone instruct the student in the theory and practice of buying, selling and handling cotton in all its details. A knowledge of all is absolutely essential to success. Practice and theory must be combined. A technical understanding is needed, but practical experience also is necessary. CONCEENING GOVERNMENT STANDARDS Below the scale of the Government's Standards, there are six Types of the Tinges," viz : Strict Good Middling Tinged Good Middling Tinged Strict Middling Tinged Middling Tinged Strict Low Middling Tinged- Low Middling Tinged Middling Stained. These are important Grades and require classification. The Types used in active practical work are termed "Working Types," in contradistinction to the Government's and other Types that are held for comparison, and remain undisturbed. The Working Types can be used repeatedly, or until so i*Eepeated here for convenience and emphasis. 20 COTTON CLASSING deteriorated in character that they no longer express clearly the Grades intended. Display. — Arrange the samples at commencement with- out formality of gradation. Make no attempt to designate Grades by position. Endeavor to show the student, by such display, the little and great differences existing in the cotton before him. A visual examination of the cotton as it lies untouched will emphasize this fact well. Note the surface of the samples as they appear in rolls, or small masses of loose cotton. The attention of every student should be drawn to this point, that all may note the similarity or dissimilarity ex- isting in the cotton, that he may grasp the necessity for arranging them into some form for recognition by division into Classes or Grades. While the samples are exhibited in this disorderly man- ner, do not allow them to be touched or handled until the explanation is fully made why they are so arranged. The student having memorized the names of the Grades, let these names be now placed upon the blackboard, if not previously done. From the list of samples displayed irregularly, let the instructor arrange some of them in the order of the names of the Grades, placing Middling Grade under Middling name, Strict Middling Grade under Strict Middling name, the other Full and Half Grades the same way, until all have been placed. Use the samples just as they are, that is, do not attempt to open any of them for inspection, but lift and place them, each sample under its appropriate name as shown on the blackboard. While performing this operation, call out the name of the Grade of the sample, explaining at the same time the con- ditions existing that cause the sample to be a Middling, Strict Middling, etc., as shown by its external appearance. Having arranged all the samples on the table in regular COTTON CLASSING 21 order, each under its right name on the board," the in- structor should now begin the operation of showing how to handle them for full inspection, by opening several times, that many facets may be seen. In describing the Grades, reference may be had to full arid brief description given (see pp. 26, 27, 28, 29), that the student may be enabled to review them at leisure for stamp- ing the knowledge indelibly on his memory. Gradation Work. — The student may now begin to handle the samples. If rolled, they should be carefully unrolled, and opened at several places. In separating, take a part in each hand, noting well the general appearance of each part as shown by such exposure, and mentally decide the Grade by this inspection. It will be observed that the samples can easily be opened by layers, and on the surface of them the character of the cotton can be readily determined by its color, trash exhib- ited, etc., as previously described. Do not tear the samples crosswise, that is, do not pull them in two. If samples are abundant, the instructor may tear some of them crosswise in order to show the difficulty of classi- fication by such pi;ocedure, and the inaccurate results ob- tained in that way for Grades, but not for Staple. After using, the samples should be rolled carefully and kept in a place of safety for future use. After oral explanations are given in defining gradation, the boxes containing the Government's Types should be open while practice work is in operation, then closed, to be opened only as circumstances may require, for confirmation in case of doubt. Reference to the Government's Standards should be made i*Tlie Government Types in the boxes can be used instead of the blackboard for guides in comparative gradation w^ork, if preferable. Let the student place the Grades as he determines them in his judg- ment, beside the box, opened. He will knovr at a glance the result of his gradation. 22 COTTON CLASSING as often as required, but no officious handling should be permitted.^^ Light. — In making display of the samples, there is noth- ing more important in demonstrating their qualities to a class than the necessary light. It can be received through windows at the side of the building, or through a proper opening overhead. Side lights must be regulated with appropriate shades or curtains. The same should be said of light admitted through the roof. If the light is too glaring, the shades should be par- tially lowered on the windows, or closed overhead. Lights become variable as the sun's rays are obscured by clouds, or meet with no interference from them. Bright sunlight should not be allowed to fall directly upon the samples, and if unavoidable, classification should not be attempted without moving the samples from such a light. Exposure to sunlight will soon bleach all "creamy" cot- ton to whiteness and impair its natural appearance. Do not attempt to grade cotton with a bright light falling directly upon it, nor face the light with sample in hand. Grading cotton early in the morning with a reddish halo in the eastern sky, or trying to define its character late in the evening with a similar coloring in the western horizon, gives cause for an exaggeration of its Grade to fully a half more than it really is. Such lights are deceptive in their nature and approach very nearly artificial ones, which are valueless for classification purposes. From light to shade and shade to light, as the passing of clouds during the day, are causes that produce varying isln practice, the student should be required to make up lists of different Grades, as M., S. M., S. L. M., etc. Begin at the highest and go to the lowest Grades ; from, the lowest to highest Grades, or begin at M. and grade up or down from it, which he can do well after mas- tering the art. See p. 20. COTTON CLASSING 23 ideas respecting gradation, and care should be exercised to allow for changteable lights. While- classifying samples displayed near windows on that side of the room upon which the light proves too severe, the back should be placed to the light, with the body inter- vening between the light and sample — preferably the light should fall over the left shoulder while the cotton is be- ing examined. Classing cotton under a skylight in the roof requires that as much care be exercised in governing such light as that admitted by windows, which to a large extent is done by movable curtains, as previously stated. Cotton is classed under three different lights — ^that from side windows, sky or overhead, and in the open air. Open air classification possesses the same considerations as shown in both the former described lights, but the in- tensity or feebleness can not be governed as light admitted into a building, hence the Classer must govern himself. In classing cotton in the bright sunlight, a better idea as to the real color of the cotton and its imperfections can be had by having the back turned to the light and the sam- ples opened in the shade of the Classer holding the sample. To attempt to class cotton in sunlight reflected from white or gray earth or when snow is on the ground, renders the classification doubtful. Alternately classing by window side light, or from over- head openings, or in the open air, conduces towards pro- ficiency. A Classer familiar with window side light classi- fication finds it difficult to grade cotton otherwise. The same results follow the experience of one conversant with overhead lights, while a Grader accustomed to open air work could not do satisfiactory classing if confined to a room, no matter how the light be admitted. Expert Classers whose duty requires them to examine cotton under different conditions, can, by practice, familiar- ize themselves so well with classification work that they can do good execution in any light, except artificial. 24 COTTON CLASSING The old adage, "Practice makes perfect," applies forc- ibly in cotton gradation. Perfection can not be attained, but constancy and repetition lead near to it. The penman does not hesitate to think how a letter is made before attempting the completion of a word; the telegraph operator does not stop to think how many dots or dashes are necessary to make a letter or build a word, but by practice, coupled with knowledge, the two execute the functions required of them intuitively. The analogy is correctly drawn with reference to the Cotton Grader. He must acquire a knowledge of gradation, with which he becomes as familiar as the penman or opera- tor. He must class intuitively. He cannot, in active work, stop to think how much or how many pieces of this or that are admissible in a sample of cotton to give it a certain Grade. Usually the first impression in determining a Grade of cotton is the one that will hold. Reverting to the sample a second or third time often re- sults in confusion, doubt, and generally an error. This is not the rule, but an exception. An experienced classer, familiar with a certain Stand- ard, will call the Grade as fast as he can open the sample to be inspected. PRACTICAL GRADATION WORK With the immediately preceding explanation, let us again revert to the demonstration work. The studeni may now disarrange the samples and place them as at first exhibited in disorder, then repeat the opera- tion of the instructor, by placing the samples under the proper names. If an error is made during the work, let it remain until all of the samples are placed. Should the operator not de- tect the mistake, and another student could, let the student call the attention of the class to it, and proceed to make COTTON CLASSING 25 the correction. Should no student notice the error, the in- structor should do so, at the same time explaining how and why it is an error. This disarranging and rearranging should be frequently repeated as a practice exercise leading to practical work. Erase now all the grade names from the blackboard, and remove the Government's Types from view. Each student with pencil and small tablet should com- mence the examination of the samples for gradation, as de- scribed, and write in the tablet the names of the Grades, as he determines them, and the number of each. After all have examined the types, a comparison of records can be made, one with another, and for correction, with the Standards on hand, or as called by the instructor. Placing say 50 samples of different Grades upon the table, let them be numbered from 1 to 50, inclusive, by placing a small card, with a number on it, on each sample. Students should take up and examine each sample, sepa- rately, placing the name of the Grade, as he determines it, opposite that number on his tablet, and continue this oper- ation until he has classiiied the whole 50 samples. After all the students have completed the classification, the in- structor should take the samples up, one by one, calling out the Grade of each as he proceeds. At the same time each student can check the calls as made by the instructor, and ascertain from them his nearness to accuracy, as meas- ured by his own ability. Such proceedings will enable each student to witness his progress in the work, and by frequent repetitions, finally achieve success. Such exercises can be repeated over and over, until all the students classify with approximate accuracy. Samples that have become impaired from repeated hand- ling, and no longer represent the Grades intended, should be discarded and others representative of the Grades wanted, substituted. 26 COTTON CLASSING CHAPTER II SECTION V— COTTON CLASSIFICATION, SPECIFIC SPECIFIC GRADATIONS The student having learned the names of the Grades and what constitutes a Grade, to aid him in his work, the following arranged tabular forms will be found convenient. Before attempting Gradation of cotton, he should know what to look for when inspecting a sample for that purpose. For convenience the following tabular form is reversed from that given in Grade Descriptions (i)age 26) by com- mencing at the top of the scale and descending to the lowest Grade. It will be noted in the column "Look for," that similar words, terms and expressions are repeated in several in- stances. The words indicating the character of impurities as appearing in the different Grades, must not be construed as an evidence that the Grades are similar, but as an evi- dence that they are alike only in an increasing scale of im- perfections, and dissimilar to the extent of the increased amount of impurities. Note the stated similarity between Strict Low Middling and Low Middling; Good Ordinary and Strict Ordinary, in word descriptions. The class of impurities in Low Middling is about the same as in Strict Low Middling, but in an excess quantity. The same rule applies in the Ordinaries. All the Grades, barring dirt, sand, stain, and tinge, are affected as indicated by the scarcity or abundance of for- eign substances in them. A Low Middling cotton could be brought to Middling if the excess of trash were removed, or even to Good Mid- dling by further cleaning, if discolorations were absent and no gin cuts or other imperfections appeared. COTTON CLASSING 27 In classing the Tinges and Stains, the same process must be gone through as for examination of the white cottons. Look for the same imperfections in grading them as are looked for in grading the white cottons, but decide from the discolorations present as to where to assign them. Deep coloring gives the Stains that are distinctly shown in the "Bolly Cottons" of West Texas and Oklahoma. i«. TABLE VI READY REFERENCE GRADE TABLE WITH BRIEF DESCRIPTIONS NAME LOOK FOE FAlBl' ^Mature fiber, absence of all im- perfections. Pure cotton, well ginned, fluffy, silky, lustrous. V-Color rPale Cream twhite STRICT MIDDLING FAIB < ^TVIature fiber, clean cotton, well ginned, flufEy, lustrous, silky. A speck may be seen occasionally. ^Color Pale cream White MIDDLING FAIB18 ^Mature fiber, clean cotton, well ginned, fluffy, lustrous. Specks or motes barely perceptible. ^Color f Pale cream \ White STRICT GOOD MIDDLINGlS ^Mature fiber. Well ginned, fluffy. Leaf specks, motes more promi- nent. Scarce. Color { Cream White icSee "Bolly Cotton," Appendix. I'Fair and S. M. F. are two high Grades rarely seen, and are more technical than real for practical utility. isGovernment Standard Types. (See Appendix.) 28 COTTON CLASSING NAME LOOK FOE GOOD MIDDLINQIS ^Well ginned, less fluffy. Leaf pieces few, more prominent. Few mlotes. < Good fiber. ^Color Cream White STRICT MIDDLING18 MIDDLINGIS STRICT LOW MIDDLING18 --'\^^eU ginned, more leaf, motes. Good fiber, few^ naps. ^Color { Cream White J More leaf, seed fragments. Few naps, fair ginning. Eeddish spots, slight, occasional, often missing. r Cream ^Color I ^.^^ 'Gin cuts observable, small and large leaf, broken seed, naps and Spots admissible, few. --Color J White I Dingy LOW MIDDLINQlS 'Gin cuts, small and large leaf. Motes, broken seed, naps, spots. Dirt perceptible. r White -Color J ■^. ^Small and large leaf, motes, hulls, naps, dirt, spots, gin cuts. STRICT GOOD OEDINAEYlS J r White ^Color ) Smoky I Dingy GOOD OEDINAEylS J Large and small leaf, sticks, hulls, dirt, sand, naps, gin cuts, spots. -Color White Smoky Dingy 'SGovernment Standard Types. (Appendix.) COTTON CLASSING 29 NAME STRICT OBDINAET LOOK FOE 'Grass, stems, sticks, whole and broken seed, pod particles, or scale, motes, gin cuts, naps, leaf, small and large, sand, dirt, stain, tinge, spots. -Color /'Smoky J Dingy I Bine ^^Eedinsh OBDINAET LOW OKDINABY INFKRIOB The same imperfections as shown in all the Ordinary types, but in an increasing proportion in these. isfiovernment Standard Types. 3(1 COTTON CLASSING H Z i tJ u Q 3 TD X O n C <^ a P^ D p «^ 4> "d u . KZ *J' HO ,— H o HO «S5 c Z" J= M. and Blues quoted the same, then M. Blues would have the same value as S. L. M., and would be quoted "M. Blue with S. L. M. value," or "S. L. M." Were S. L. M. quoted at 5/16 off. Blues 50 off and L. M. 100 off, it is evident the Blues fall midway between M. and L. M., and as they are subjected to a heavier Discount than S. L. M., they can not be quoted for that Grade of cotton in any way, nor so low as L. M. because of their lighter quality.* "Sandies" and "Dusties" constitute a Low Grade of cot- ton found occasionally in the Market. Cottons gathered damp, containing an excess of sand or dirt, afterwards dried before passing through the ginnery, have the dirt or sand so diffused throughout the cotton as to receive the names of "Dusty" or "Sandy." They are penalized with a varying Discount if containing more than one per cent of sand or dirt. *See "Difference Sheets," p. 156. App. 437. COTTON CLASSING 53 Sea Island Cotton Sea Island Cotton has certain special features not found in any other cotton, which mark it as one of the best cottons grown for special purposes. It is more specially referred to as Staple Cotton, and may be classed* as the prince of cot- tons. Its fibers are soft, silky, strong, and range in length from 1 1-2 to 2 inches; generally about 1 5-8 inches. The condition of the weather at gathering time is a fac- tor influencing its quality, causing a variation in its color and body, which variations are largely overcome at gath- ering time in the care exercised by the Growers who spe- cialize in the production of the best quality. Sea Island Cotton is not classed as are the long or short staple Uplands referred to as Middling, Strict Middling, etc., but designated with reference to the locality where grown, with such adjective prefixes as. Fancy, Choice, Fine, etc. The quotations are : TABLE VIII Fancy Floridas Extra Fine Floridas and Fancy Georgias Georgias Extra Choice Floridas Fine Floridas and Georgias Extra Choice Georgias Medium Fine Choice Floridas Common or Dogs Choice Georgias While the Sea Islands have been sold by grade names, as Choice, Extra Choice, etc., such a plan has been found unsatisfactory because these qualifying terms have refer- ence to the color only, a distinctive consideration that should not be overlooked. These appellations do not give the char- 54 COTTON CLASSING acteristics as to the length and strength of the staple, two of the most important features this Type of cotton possesses. It is the prevailing custom now with Exporters and Deal- ers to sell on Types, guaranteeing the cotton on delivery to be the same in quality as that shown by the Types sub- mitted.^' Bender Cotton— "Benders" Soil and location possess influences that affect cotton and produce different qualities, resulting in giving us the char- acter of cotton previously mentioned as the "Uplands," "Gulf Types," "Texas" and "Oklahoma" varieties, and the Sea Islands. There grows in the State of Arkansas a variety of cot- ton valuable for its physical qualities of length and strength of staple that give to it extra merit. It is a medium between the long and short staple varie- ties, and in the Market has a distinctive valuation compared with other cottons grown in that territory. It attains its best qualities from the river bottom soils, producing from them a strong staple with heavy and good body, pulling frequently full 1 1-8 inch. Enjoying such a habitat, environed in the river bottoms and bends of the river, such cotton has been designated as "From the bends," "River bend cotton," "Bender Cotton" or "Benders." In quoting such cottons, the Trade places them on the market as "Benders," and those familiar with their classification and qualities, readily know what character of cotton is quoted when such a name is given. The author has been unable to get the true history and origin of this specific class of cotton. Evidences seem to indicate its origin to be from the alluvial soils of the river lands in Arkansas, in which silt and certain chemical ma- 32See "Mill Buying— Northern," in Book III, p. 341. COTTON CLASSING 55 terials exist that are peculiarly well adapted for the growth of this particular cotton. While peculiarly adapted to the alluvial river soils of Arkansas, "Benders" of equal quality are found growing in the Mississippi valley of Louisiana, and is quoted occa- sionally from Mississpipi River soils in the State of Missis- sippi, and it is not unusual to find them appearing in the Market from West Tennessee. Linters Linters constitute that character of cotton secured by regiilning the cotton seed. This is done at the Cotton Seed Oil Mills, to better prepare the seed for grinding before admission to the machinery used for that purpose, and to secure the excess of lint remaining attached to the seed. Linters are not classed as other cotton in respect to their qualities, but are pressed and baled as other square bales. Being secured exclusively by the Oil Mills, they are never sold on the open Markets ; but instead, are offered by them- selves to a class of purchasers who make a specialty of deal- ing in such cottons. As a staple cotton, they have no value, and are never re- ferred to as Middling, Strict Middling, etc., as to Class. Ginning fibers from seed containing dirt, or when the seed are hot and damp, gives a lower grade of Linters than if taken from clean, dry seed, producing in this way two or three Grades or qualities, as A, B, C, etc.^^ Due to the nature of the seed, that from Sea" Island cotton is never re-ginned, but only those seed termed "fuzzy" are passed through the machines. The amount of Linters obtained from a ton of seed va- ries from 35 to 50 pounds, and sometimes reaches 80 or more if the seed have not been closely ginned at first gin- ning. ssMany mills make but one quality of Linters and refer to them as "Linters" only; no attempt being' made to classify them in any w^ay. 56 COTTON CLASSING They are not tenderable on any of the Cotton Exchange Contracts, hence are not classed with other commercial cottons. SECTION VI— COTTON DAMAGE LOOSE "Loose Cotton," as defined by the Trade, is not a cotton of any definite character, nor has it any grade name sig- nifying its quality beyond that given to it as "Loose." Under the American System of handling cotton, samples are drawn from the bales for the purpose of obtaining the quality of cotton contained in them, which after bein^ drawn are never returned to the bale from which they were taken, therefore become at once surplus to the pur- chaser of the bales. Buying cotton in promiscuous lots containing a diversity of Grades causes the accumulation of many qualities of it in the hands of the purchaser, and when the drawn samples are received in sufficient quantities for the purpose, they are pressed into a bale and become at once a part of the "City Crop." Estimating the average cotton crop of the South to be 14,000,000 bales, from each of which approximately 12 ounces of cotton are taken as a sample, the "City Crop" from such a source equals a total of 296,000 bales as a re- sult of our Sampling System. Often a bale of cotton is cut on both sides for the purpose of getting samples therefrom, and in this way the amount of cotton taken is virtually double that generally drawn. Should the bale exhibit evidences of containing cotton of different qualities, it is not unusual for it to receive cuts in many places, from each of which samples are taken, vary- ing in weight from a few ounces to a pound or more, which, materially adds to the thousands of bales of "Loose." COTTON CLASSING 57 ' It is a prevailing custom in all spot markets and also the rule of the Cotton Exchanges to weigh all cotton before sampling, such proceeding giving full weight to the seller at the time for his bale. Drawing samples from a bale usually leaves a small quantity of "Loose" clinging to the edges of the cut, giving it a ragged appearance, and this is an inviting source for fire, to remove which the cotton yard man, warehouse man- ager, or compress employees closely pick all such cotton therefrom, and in this manner greatly increase the quanti- ties of "Loose." "City Crop" is the proper name given to that character of cotton made into bales from accumulated samples taken from other bales as described in the preceding. The Discount from Middling value is not constant. It is governed principally by the quality of cotton in the bales, as to whether it is made from high, low grade, or mixed sam- pled cotton of many Grades. "Loose" is not tenderable on any Cotton Exchange Con- tract. DAMAGED COTTON "Cotton Damage," as recognized by the Trade, has ref- erence to damage affecting the cotton fibers, and not to the bagging covering the bale. Bleached or rotten bagging gives evidence of weather ex- posure, and is the first indication of possible damage to the cotton. Bagging may be bleached, yet no damage exist to the cotton wrapped in it. Damaged cotton is found underneath all rotten bagging, retaining the color of the soil on which the bale has lain, unless the damage has existed for some time; in the latter case the cotton may be almost black from mildew, or red- dish brown from the continued exposure. Cotton in contact with the ground, or on open platforms, soon damages after getting wet, if the bales are not turned to allow the damp part to dry. Damage results quicker to 58 COTTON CLASSING cotton lying upon the ground than to that resting on cotton platforms. A bale of cotton standing on end has its fibers pressed closely together where it touches the ground or floor, ren- dering it more ready to accept moisture by reason of the capillary attraction induced through such compression, and when once begun, wet cotton fibers willingly give up a part of their moisture to others in touch with them, causing the dampness to grow and spread within the bale until the dam- age corresponds with the area dampened. Wet cotton soon mildews, and is hard to dry when in such a condition, consequently should be taken from the bale at once, or increased damage follows. Wet cotton under- neath or inside of a bale dries so slowly that the whole damp mass soon decays and mats into a lump, at the same time affecting, to a greater or less extent, other cotton touching it. Cotton fibers have a great affinity for moisture, and the longer they remain damp or wet, the greater the possibility for damage. Every time a bale of cotton gets wet, it should be turned and dried if possible. Subsequent wettings increase the possibility for damage, a fact that emphasizes the necessity for drying the bale after each wetting. Cotton will resist moisture and dam- age a long time if it be dried after receipt of water. A rain of one day or several hours on cotton will not re- sult in damage if it can be dried soon afterward, but if compressed while damp, or confined in closed cars and shipped any great distance in this condition, damage will accrue. Compressed cotton damages quicker than the gin bale, be- cause of the close contact of the fibers under heavy com- pression. Cotton always begins to damage first under the hoops, or where compression is greatest. COTTON CLASSING 59 60 COTTON CLASSING COUNTRY DAMAGE Country damage, as known in the Trade, has a two-fold meaning: First, a bleached and soiled bagging without any real damage to the cotton; second, the bale covering not only shows weather exposure, but actual damage exists with the cotton. Apparent damage is recognized as "country damage" be- cause of the fact that the bales of cotton have bagging that is bleached or soiled, giving evidence that the cotton has been ginned for some time, and for the assumed damage, the Trade often penalizes the bale by discounting the cur- rent price. When demand for cotton is good, showing a tendency to advance in price, the Discount may not be ap- plied ; but if cotton be offered freely on a declining Market, advantage is taken of the apparent damage, with a penalty inflicted on the seller by reducing the price. A careful inspection of the bale will easily confirm the apparent damage or want of any. Actual damage to the cotton is indicated by the appear- ance of the bagging, as it shows to be soiled, discolored or rotten. Where the bales have been resting upon red lands, the bagging shows the coloripgs of such soils ; if on black or dark ground, the bagging indicates such shades. If actual or other damage is suspected, a close examina- tion of the cotton should be made by picking tufts of lint from the bale and looking for moisture and rotten cotton. Every place on the bale exhibiting any evidence of damage should be carefully inspected. * A recent damage is known by the dampness of the cotton, and the strength of the fibers having been destroyed ; but if the damage has existed for some weeks or months, the cotton will show to be darkened by mildew or will form compact mats or lumps of a reddish brown color with a total destruction of the fibers. These mats may be wet or dried. If the latter, the examiner should dig deeper into the bale, removing the dried mass and any damp cotton COTTON CLASSING 61 underneath it, until the good or undamaged cotton is reached. , Such examinations are guides in determining the extent of damage ; but if the damage is extensive, the actual amount can only be determined by removing one or more, ai^d sometimes all of the bands. As much as 100, 200 and in some instances 300 pounds of damaged cotton have been taken from a single bale by reason of long exposure to dam- aging sources.* It is not unusual for farmers to allow cotton bales to lie on the ground on one side or stand on end for days and weeks, turning them occasionally to prevent damage, so that when offered for sale, they appear externally as if in good condition ; yet a close examination will reveal an actual damage existing. This damage arises when the damp ex- terior of the bale is allowed to dry but not long enough to dry all the wet cotton ; hence damp cotton under the dry still exists, and being concealed, remains to cause further damage, unknown to the owner. Holders of cotton frequently resort to the practice of plac- ing the bales on poles or skids to prevent their coming in contact with the soil underneath, believing the plan a good one to prevent the occurrence of damage; but if not utilized in an efficient way, poles prove factors or agencies of destruction to cotton placed on them. The ends of poles extending beyond the edge of the cotton bale will receive rain, which is easily conducted along the poles under the bale, coming in direct contact with fibers under greatest compression, where evaporation is slow, and moisture is rapidly absorbed, leading to early damage. Subsequent rains add more moisture, and so conduce to further damage. Poles or skids placed under bales should not protrude beyond the edge of them if the bales are standing on end; but, if used at all for this purpose, the ends of the poles should be trimmed slanting from the bales, that any water *See Pickings, p. 64. 62 COTTON CLASSING falling on the poles may run away from, and not under the bales. Bales resting upon their sides, with poles underneath, should be turned after all rainfalls, that careful examina- tions may be made by drawing tufts of cotton from them which may reveal moisture or damage. Where a bale of cotton shows a small damage on one side, it is usual to adjust it for sale and purchase by agreement between Seller and Buyer, and while the transaction may be satisfactory to both parties, yet such a form of adjustment does not in every instance establish the amount of damage. The records are many showing satisfactory adjustments by agreement between dealers for an estimated damage, yet when the bands are taken from the bale, the real dam- age shows to be much in excess of that agreed upon. As stated, external damage may appear slight, but a careful examination sometimes shows that the moisture has not only damaged the exterior of the bale, but has penetrated deeper, and in some instances has gone entirely through the bale. Cotton having once received moisture will absorb it again with greater rapidity. Where moisture has penetrated deep into the bale, with dry cotton covering the surface, the examiner should be so familiar with such cotton as to lead him further into its examination. Buried cotton in a bale saturated with moist- ure, will retain the moisture for a long and indefinite time, often carrying so much that water can be squeezed from it. Dealers, classers and examiners should familiarize them- selves thoroughly with the preceding for personal protec- tion. A knowledge of this will bei an asset in every trans- action. TRANSPORTATION DAMAGE This occurs from carelessness or hurried action of the transportation companies. If damaged cotton pass the inspection of the examiners. COTTON CLASStNG 63 compressed and loaded into closed cars or vessels in this condition, the damage will not only be retained, but the probabilities for its increase are manifold, to be revealed on examination at destination. The transportation company will be held liable, because its bill of lading will show that the cotton was received in good condition, and delivered in bad condition. "Country damage" cotton passing inspectors will retain the damage to destination, resulting in a claim against the transportation company, if the damage be not discovered and removed before final delivery. Cotton received dry on a compress or railway platform, compressed in that condition and shipped without any rain falling on it while in transit, will be delivered at destina- tion as received at point of origin. Cotton received dry, having had rain upon it before com- pression, compressed damp, loaded into closed cars in this condition, will damage in transit, and if for export, the damage will increase. Cotton in good condition, loaded into leaky cars, receiving rain through the leaks during transmission, will not dam- age in transit, provided the shipment is not longer than two or three weeks reaching destination, and no claim will follow if the cotton is unloaded and dried before inspection and compression. The cotton unloaded wet does not signify it is damaged. Inspection should be refused until the cot- ton dries, as inexperienced examiners might report damage when only wet. Wet cotton is not always damaged cotton. Damp or wet cotton will absorb moisture with greater rapidity than dry cotton, and for this reason should not be loaded into any car or vessel in such a condition that no evaporation can take place. Cotton placed upon wharves of river fronts or sea land- ings takes up moisture rapidly by reason of its nearness to the water's edge, and such are undesirable points to land damp cotton. 64 COTTON CLASSING Let it be remembered that compressed cotton will absorb moisture more rapidly than the loose gin bale; and, when a compressed bale carrying an excess of moisture is loaded into the hull of a sea-going vessel, it is at the water's edge or beneath it ; confined where steam may have access to it ; so closely packed by the seaman's screw that practically every avenue for the escape of moisture is closed, further increasing the possibilities for a greater damage. While cotton can be shipped with greater ease than any other agricultural commodity grown, yet too much care can not be exercised in its protection while in transit. PICKINGS Cotton exposed to weather influences as described in "Damaged Cotton,"^* is more or less affected, showing first on the exterior of the bale, and afterwards deeper in it, as damage increases from continued exposure, resulting in finally destroying half or more of the bale. Damaged cotton not being acceptable to the Trade as a commercial commodity, necessity demands that it be "con- ditioned" before acceptance by the Buyer. To do this often requires that all bands be removed, bagging stripped off, and wet or damaged cotton taken away, leaving the re- mainder to be again wrapped as the original bale, with new bagging. A peculiar feature shown in damaged cotton is the red- dish brown appearance it acquires after long exposure, which colored cotton must be removed from the bale be- fore assurance can be given that it has been properly pre- pared for sale. It is practically impossible to take the entire damaged portion away without getting some of the good, mixed with the bad, cotton ; which fact causes the "pickings" to show different qualities of it. 3*See Damaged Cotton, p. 57.. COTTON CLASSING 65 Owing to carelessness or willful negligence practiced, by growers in not properly protecting their cotton at home or storing it in some public warehouse, it is left to suffer the penalties inflicted by weather exposure, for which the. farmer pays in damaged cotton when he offers it for sale, and often the penalty proves excessive. To prepare such cotton for market, "Pickeries" have been established in several of the Southern market centers where thousands of bales are treated annually, while large quantities of "pickings" are gathered at the com- presses from damaged cotton that accumulates there, along with other cotton. Experience has shown that moisture lingers a long time in a bale of cotton after once getting in it, and to preserve the integrity of the bale, all wet cot- ton must be removed. For this purpose "pickeries" and compresses prepare platforms for displaying damaged, wet cotton to sunlight and air for drying it thoroughly, after which hand pickers separate the different qualities of pick- ings into different lots, putting the best cotton to itself, the next best to itself, etc., until the whole is assorted and again rebaled for market into bales containing the separated qualities of cotton. Recently inventors have given to us the combing gin that has proven itself to be of great service in re-ginning "Loose" and "Pickings" in preparing them for a better commercial value. Separating the better Grades from the medium or infe- rior ones, and passing them through combing gins or cards in separate divisions, adds greatly to the value of the cot- ton by increasing its gradation, but the operation reduces its staple value by breaking or cutting a large per cent of the fibers. Damaged cotton is a fruitful source for the. origination of thousands of claims against transportation companies whose agents sign bills of lading stating that the cottoi;! received is in good condition at the time of acceptance for 66 COTTON CLASSING shipment, but followed with claims for damage after reach- ing destination. No doubt the large number of claims, amounting to hun- dreds of thousands of dollars, is caused in part by the in- ability of the transportation agents to discover the damaged cotton when received, and the absence of any proper or cor- rect guide to tell them how to determine damaged cotton. No records are extant giving fully the loss inflicted upon the South by reason of the carelessness of the Growers in not protecting their cotton from weather exposure ; but it is safe to say that it will run into millions of dollars annually, more or less, according to the character of the weather ob- taining during the season for gathering, and the time im- mediately following it. The Trade, knowing the approximate loss from the cotton crop caused through sampling and weather damage, esti- mates its percentage, and deduct for it in making quotations for purchase. This charge falls, of course, upon the Grower. "Pickings" are not tenderable on any Cotton Exchange Contract, nor quoted at any price by the Trade, hence no quotations are given for their purchase. No definite Discount is made for them from the Middling price. COTTON FIBERS Cotton fibers are long hollow tubes, possessing transverse joints at irregular intervals, and when these tubes are de- prived of moisture, they appear flattened and more or less curled. The twists in ripe or mature fibers are more prominent than those shown in immature ones and give to good cotton the quality of buoyancy, known in trade par- lance as "body." Such fibers have the greater tensile strength and give to commercial cottons their best value for fabrication into yarns or cloths, and are the most eagerly sought by thread manufacturers, especially if they show to be of the requisite length. When twisted fibers are brought into contact with each COTTON CLASSING 67 Complete fiber of cotton magnified ninety times. The base of the fiber is shown in front, and is the most massive portion. The front end or tip of the fiber is shown at the right and is very much finer. Observe that the fiber has a special form of attachment to the seed. If the fiber is ripe and the seed cotton is dry when ginned, 68 COTTON CLASSING other, the microscope shows that they cling together and twist about each other with remarkable tenacity, which is a valuable feature for giving strength to a thread when niany fibers are wound together to make it. Immature fibers do not exhibit that buoyancy shown in the mature ones. They do not show so much curl or twist, and when drawn out are not so inclined to assume their f orifier curled shape, hence a lack of buoyancy or good body. Immature and weakened fibers possess qualities in com- mon; the one may be weak from insufficient growth, the other from decay brought on by exposure. Cotton exposed to weather conditions alternating fre- quently from wet to dry, soon suffers impairment or de- struction of the vitality of its fibers, and the same result follows if the cotton be stored, but a longer time is required to bring about this result. The humidity of the atmosphere rarely remains the same for 36 hours, and each and every change is quickly recorded by the altered weight of the cotton, due to the fact of the fibers taking up moisture or giving it off as conditions vary. This repeated change of the humidity and dryness of the cotton fiber will finally destroy its tensile strength, though protected from weather influences by ample shelter. The cotton on the outside of the bale is the first to show the attacks of time and exposure, and its fibers are the first to become impaired. Fibers buried deep in the bale remain vital indefinitely. each fiber tends to break away at the base. Note that throughout the greater part of its length the fiber tapers regularly. Here and there the fiber is twisted first one way, then another. This feature is known under the descriptive name of spirality. It is a mistake, however, to regard the fiber as a continuous spiral. An examination will show that for two or three turns the fiber is twisted to the right and this twist is followed by a reverse twist of about equal length. These pairs of twists may be seen throughout the middle portion of the fiber. They are less pronounced near the base and for. a long distance below the tip. The fiber shown is of such -a. size that if uncoiled and straightened out it would measure nearly ten feet in length. It should be borne in mind that this drawing has been made with the very greatest care and that it represents the facts faithfully. Only the attitude of the fiber is abnormal. In ' order to p:et all into the compass of one of the pages of this publication it wa* '. necessary to coil the fiber. A cotton fiber would never normally assume such owing to inequality of Low Good Ordinary J Grades. 41N0TE. — ^At a conference of American and European Cotton Exchange representatives, held in Liverpool in June, 1913, the Liverpool Cotton Exchange agreed to widen the difference betvyeen their Lov^er Grades,. 40 As given to the author by Sec. Hester of the New Orleans Cotton Exchange. *iSee Farmers' Bulletin 591, U. S. Department of Agriculture, p. 12. COTTON CLASSING 77. to become effective September 1, 1914, in order to conform nearer to the United States Standards. There is more color in Fully Low Mid- dling to Ordinary, inclusive, in the Liverpool than in the United States Standards. Fully liow Middling' (Liverpool) has one type in the tv^elve tinged, while the whole exhibits a grayer cast than the U. S. Standards. Liverpool Fully Good Ordinary and Good Ordinary show several types of "off color." The use of the European word "Fully" corresponds to the American "Strict." The comparison of United States Standards with Bremen and Havre are not given, because the Standards of those Exchanges are the same as Liverpool. The American Standard Classification is that adopted by the New York Cotton Exchange, and also by the Cotton Manufacturers' Association of North and South Carolina, and not compared here to Liverpool, as it is thought these organizations will adopt that of the Government at a near future date. The revised Liverpool Standards, compared to the U. S. Standards, are as follows: UNITED STATES LFVEEPOOL Middling Fair Strict Good Middling Good Middling Strict Middling Middling Strict Low Middling Low Middling Strict Good Ordinary Good Ordinary equal to Middling Fair " " Fully Good Middling " " Good Middling " " Fully Middling " " Middling " " Fully Low Middling " " Low Middling (grayer) " Good Ordinary (off color) " " Ordinary MB— 4 78 COTTON CLASSING CHAPTER III MERIT OR SPINNABLE VALUES. SECTION VIII— STAPLING COTTON GRADE VALUES Cotton has a commercial value as measured by its Grades. Grades are determined as set forth in Section 2, by de- scribing the means for classing them. Grade Values are those employed in the Trade between Merchants*^ and Cotton Buyers who make no deliveries to the Mills. A Grade Value represents the cotton fully with respect to its cleanliness and discolorations, but irrespective of its Staple. Determining the length and strength of the cotton fibers by physical tests is called Stapling. The Staple of cotton represents its length of fibers, but not the strength of them, and it may be short or long, coarse or fine, rough or silky, hard or soft, but to express its phys- ical qualities fully, the strength or weakness of the fibers should also be considered. Staple Values are those given to the cotton as determined by the length and strength of its fibers, as required for spin- ning demands. . These values modify the Grade Values by adding to or taking from them an indefinite percentage. Staple Values increase in a relative way, by greater dif- ferences than those determined by superficial gradation. Cotton showing a 1 1-4 inch staple has a greater value than 1 1-8 inch, by approximately 150 to 250 points, while a *2Eef erring to Dealers who handle cotton as merchandise. COTTON CLASSING 79 difference between Middling and Strict Middling, or Strict Middling and Good Middling as to Grade, would probably not be more than 12 1-2 or 25 points, only in exceptional cases. Each increase of 1-8 inch in Staple length adds practi- cally 250 points, or 2 1-2 cents a pound on cotton of High Grade. This increase is not constant. A superabundance of Staple Cotton on the Market, with an inactive demand, may reduce such a Premium. Staples are just as susceptible to market fluctuations as short fiber cottons. Contingencies govern in the one as in the other. Staple Cotton is classed as other cotton respecting its Grade, as Middling, Strict Middling, etc., then its Staple Value is ascertained by an examination of its fibers for length and strength. There is no Standard for stapling cotton. Frequent dis- agreements between operators dealing in Staple Cotton give evidence that none has been established. What one operator would call 1 1-8 Staple, another migljt call "1 1-8 full," another "shy 1 1-8," or "Liverpool 1 1-8," etc. These discrepancies evidently arise from different meth- ods in "pulling" the fiber, the Classers depending on their judgment as to what constitutes 1 1-8 or 1 3-16-inch in length, as reflected from their memory, or possibly, froni the fact that one Classer may draw fibers of 1 1-8-inch from a sample, while another may draw a staple measuring actu- ally 1 &-16-inch from another sample from the same bale. All Mills using Staple (long fiber) Cotton do not require the same lengths. Some have machinery suited to spinning 1 1-8 to 1 3-16-inch Staple, and could not use 1 3-8 or 1 7-16- inch without expensive change in machinery or the intro- duction of new equipment. Some are equipped to use a wider range of lengths and a greater variety of Grades. 80 COTTON CLASSING Mills operating upon short Staple Cotton are more spe- cific in their demands for supplies. Selling cotton to Mills in which all their demands are ful- filled is called selling cotton on its Merits. A Merit Value is two-fold : a value placed upon its Grade, and another on its Staple. The average Grade used by American Mills is about Strict Middling; and 1 1-16-inch Staple*^ as a minimum length in the production of the better grade of light fabrics. The following table will give a good idea of the compara- tive values of different Grades of cotton in connection with the Staple varieties. These prices are subject to the contingencies of the Mar- ket, and the relative values are not permanent. TABLE XI STAPLE COTTON MARKET QUOTATIONS** GRADE « Length (Inch) 1 1-2 Length (Inch) 1 7-16 Length (Inch) 1 3-8 Length (Inch) 1 5-16 Length (Inch) 1 1-4 Length (Inch) 1 3-16 Length (Inch) 1 1-8 Cts. Cts. Cts. Cts. Cts. Cts. Cts. G. Mid. .... 20 18 1 15i . Dem'nd Prices 19 17 15i ' good advanci 17i 16 15 ng slow 16 IS 14 ly 15 14 13i 13i 13 12i 12i 12i St. Mid Middling St. L. Mid , Low Mid 12 An inspection of this table shows some remarkable dif- ference in Staple Cotton, and the high values placed on the extreme lengths of good Grades. It will be noted that on 1 1-8-inch staple, a difference of 1-2 cent a pound between Middling and Good Middling is <3This has reference to Short Staple Cotton. **From. a quotation of Staple Cotton in one of the prominent South- em markets, January, 1908, inserted for explanation. COTTON CLASSING 81 shown, equivalent to $2.50 a bale, while the quotation shows the difference between Middling and Good Middling, 1 1-2- inch staple to be 4 1-2 cents a pound, equivalent to $22.50 a bale. The strength of the fiber is an important matter to be considered in classing for Staple. A perished or weak fiber in a High Grade cotton would so weigh against its useful- ness as to impair its value as a Staple Cotton altogether. A Staple Cotton of 1 1-8 or 1 1-4-inch, of good strength, merits a higher consideration than cotton showing 1 3-8 or 1 1-2-inch, if its fibers are immature. Members of the Trade and Spinners differ as to what is termed "weak staple." What might be considered by one as "good staple," another would call "weak." These dis- putes evidently arise from the fact that a very strong fiber is required to produce a certain fabric in the one case, while in the other, the article to be produced does not re- quire that extreme tensile strength. Cottons of different Types possess different inherent qualities of strength. In one Class the strength is a fea- ture of great distinction, while in another it is not so marked, yet in both the fibers may show maturity. The Upland Cottons of Mississippi show preferential dis- tinction over the same Class of Georgia Upland cotton, while those of Georgia have merits above those of the Caro- linas. The Mississippi Upland Cotton has a better Staple than that grown in Georgia, and Georgia's Type of Upland is superior to the Short Staple of the Carolinas' Upland. A good Staple of cotton with well-matured fibers has a better "body" than imperfect fibers. A cotton of good "body," when compressed in the hand, will quickly resume its former size after being released from pressure. Imma- ture or "dead staple," when subjected to compression, does not show that buoyancy when released. The Mississippi Uplands are credited with having a bet- ter Staple and "body" than any of the cottons east of the 82 COTTON CLASSING Mississippi river, with the exception of Louisiana, the Piedmont*^ section of South Carolina, Georgia and the Ala- bama canebrakes. The cottons of Texas and Oklahoma stand in a class to themselves. They occupy a position relatively between the Staples (long lint) and the Uplands east of the Mississippi river. The cottons grown in the deep, black soils of Texas have a better Staple than those grown on the clayey or sandy soils, and while not classed as Staple Cotton, they are sold on their merits in addition to their gradation, if for Mill delivery. Their fibers are said to be hard and wiry. The Staple Cottons grown in the lower part of Mississippi possess great merit, and almost equal Sea Island in the length and strength of their fibers. The Staple Cottons, both the Gulf Types and the Sea Islands, are the highest Types grown. The finest Staples are found in South Carolina, Georgia and Florida. STAPLING Pulling for Staple. — Light is an essential factor in deter- mining Grades, but is not so necessary for Stapling. Any light in which the fibers can be clearly seen suffices for the work. Stapling being an entirely different process from that of classification, it must be performed in a different manner. Gradation for the moment is lost sight of, and the sample manipulated differently for a distinct purpose. Tear the sample in two by force, by slowly pulling it, and note the extended fibers protruding from each part. From one part draw some of these extended fibers. Between thumb and fingers of each hand, with fibers held tightly, repeatedly draw these fibers until they show an approxi- mate evenness of length. *5See Appendix. The Piedmont cottons have exceptional values, and are especially quoted to the Trade for their exceptional qualities of fiber, length and strength. COTTON CLASSING 83 After making one test, make several others from the same sample, the average of which will constitute the- Staple for the length. Press a small bunch of these test fibers flatly between thumb and finger, hold them tightly; make a test for strength by attempting to break them. The judgment of the individual must determine the ten- sile strength of the fibers as proven by the tests described. A few fibers can be gathered at random over the sample and tested for length and strength as prescribed. In getting the length of Staple, the beginner should make sufiicient measurement of the fiber to familiarize himself with lengths that make an inch, or more, in length. Guess work should not be tolerated until practice can give the results wanted. Controversies arise often because those pulling for Staple are unable to determine what constitutes an inch in length — depending too much on guess-work, and not enough on measurements. There is an art in pulling for Staple that must be acquired before success can be assured. With thumb and fingers slightly moistened, the fibers can be better handled. At the time of drawing the fibers, slightly roll them be- tween thumb and fingers, but not enough to put them in a twist. Keep the fibers parallel and on tension. Lapping the fibers back upon each other each time a draw is made will facilitate the process and give greater accuracy.** Note. — Demonstration by the instructor will render this explanation quite clear, yet the fact should be made known that it is much more difficult to Staple cotton than to acquire the art of classification. Dealers operating extensively emiploy skilled operators for Stapling, whose experience has especially qualified themi for such work. Staplers operate individually, that is, each has his own way for pulling staple. *8See "Spinnable Values," p. 78, for further information. 84 COTTON CLASSING Showing position of the hands when pulling for Staple. 1. Grasping the first lot of cotton to begin the pull. Make the pull slowly. If too fast many fibers are broken. Hold close to the ear and listen at the tearing sound produced when drawing or making the first pull, caused by the fibers breaking or dragging upon them- selves. This is the "drag." 2. Showing sample when first pulled in two. 3. One-half the sample dropped and a be- ginning made for getting the length of fibers on the remnant left in the right hand. 4. Showing position of the grasp. 5. Taking away the loose extended fibers. 6. Loose short fibers stripped out. 7. Repeating the operation as shown at 4. 8. Pull made the same as at 1, with longer or longest fibers of the sample drawn out and held in the left hand. By taking the bunch of fibers in the left hand and lapping them back on those in the right, and drawing them again, as shown at 2, the Stapler can soon arrive at the average length. There is no definite number of times to re- peat the laps or pulls, but they should be re- peated until the desired result is obtained. While this picture gives an idea how to be- gin to ascertain the Staple of cotton, it should be remembered it is not given as a stiff-legged rule. Each Stapler generally has a peculiar way of his own for getting the length and strength of cotton fibers. If the Stapler will turn this picture upside down, he can very well see or imagine his own hands doing the work. Courtesy Dr. N. A. Cobb, Technol- ogist Bureau Plant Industry, Ag- ricultural Dep't.. Washington, D. C. COTTON CLASSING 85 Squaring or evening up ^the hand end of the "pull." right 9. Beginning to make a grasp for another pull. Fibers should be held tightly in the left hand. 10. Position of the hands before making the pull. 11. Showing the fibers drawn after the pull is made. The few fibers in the left hand are discarded. 12. Taking away the loose extended fibers. 13. Compressing the fibers latterally at their ends to prevent their flaring out too much. 14. A repetition of 12. 15. Four single fibers drawn parallel to each other, each showing a different degree of ten- sion. 16. Repeating the operation as shown at 9, with the right hand end of the fibers showing to be nearly even in length, or "squared," and the whole bunch ready to be pulled to square the other end of them. 86 COTTON CLASSING Squaring the left hand end of the "pull." 17. Smoothing out the fibers by stroking them between thumb and finger. IS. Pulling out the loose extended fibers. 19 and 20. A continuation of the process shown at 18. 21. Repeating the operation shown at 13. 22. Smoothing out the "pull." 23. Continuatnig the same towards show- ing final results. 24. The process completed, with the bunch of fibers showing the Staple of the cotton, and readj* to be measured if desired. These illustrations are given as a guide to offer the student to aid him in the process of Stapling cotton, but he should not think the positions shown by the hands are the only ones to be taken in executing the work. Many others, similarly applied, are equally as ef- fective, for no two Staplers, as previously stated, practice the same methods. These shown here explain nicely how the work can be done. It should be remembered in Stapling cotton that it is not necessary to draw out all the short fibers to get at the Staple. COTTON CLASSING 87 PROJECTION METHOD. Under the accustomed practice of stapling cotton, no definite results can be had as to the exact length of the cot- ton fibers drawn, the Trade seemingly satisfied to accept present day methods for practical purposes, which give ap- proximations only, yet so near an exactness as to satisfy Mill requirements. The Trade is not so directly concerned in knowing the exact length of cotton fibers as are the Mills, and so long as they assume a willingness to accept what the Trade gives to them, the latter make no effort, nor manifests any desire, to change the adopted methods for stapling cotton. The Trade and the Mills are familiar with the finger and thumb method of "pulling for Staple," and both know that approximate, average lengths result only, yet neither manifest any apparent concern to devise something that will give greater accuracy in fiber measurements, although controversies often arise by reason of disagreements over the diversity of opinions between the Mills and the Trade as to the length of Staple cotton sold and purchased. Knowing this fact, and since the United States Depart- ment of Agriculture has taken an active interest in the sub- ject of marketing cotton, it has devised a method for meas- uring the length of cotton fibers exactly, defined as the Pro- jection Method.* In making tests by this method, the fibers to be measured are placed between two pieces of glass, so clamped together as to confine the fibers rigidly in position; these pieces are then inserted into a projection lantern and the shadows of the fibers displayed upon a screen, which operation magni- fies them to about twenty diameters, the screen being cov- ered with transparent paper suitable for tracing purposes. *To Br. N. A. Cobb, Technologist, Bureau Plant Industry, Dept. of Agriculture, Washington, D. C, credit is due no doubt for the origina- tion of the Projection Method of measuring the length of cotton fibre exactly. 88 COTTON CLASSING PROJECTING COTTON FIBERS ON A SCREEN. COTTON CLASSING 89 Being exhibited this way, the fibers can be traced with a pencil on the paper (as the work is being done by the gen- tleman shown in the picture), and the lines measured then or at some subsequent time, A specially devised wheel has been perfected for making the required measurements. It is so arranged that any number of revolutions are recorded upon a dial in direct con- nection with it, each revolution equalling a certain length in linear measurement. As no two fibers can be found easily that measure the same in length, a definite number can be taken of uneven ones, say 20, 30, 50 or 100, from which number an average can be made, and in this way, get a practical result. Care must be exercised to see that fibers of all lengths are placed in the apparatus for measurement on the screen. The operator measures by rolling the little wheel along on the lines, taking care to follow all their crooks and mean- derings with exactness. Were the fibers made straight and held in that position between the two pieces of glass, the magnifying apparatus would display the fibers in like man- ner on the screen and make the measurement of them quite easy. EVEN-RUNNING COTTON Mill Requirements. — Having considered gradation and stapling, the subject of combining the two is now appropri- ate and opportune. The final destination of all cotton is the Mill. Mills are restrictive in their demands, and state definitely what they want when buying. Mills equipped for the manufacture of specific lines of fabrics or yarns must have a definite character of cotton from which to produce them, hence not all Mills can or do use the same Class of cotton. This gives requisition from them for a variety of cotton. No two Mills use the same kind of cotton, unless engaged in making similar fabrics. 90 COTTON CLASSING Unless Mills produce a variety of manufactured articles the demands from them for raw material are narrowed to a close range, which is confined to both Class and Staple. One will use Middling, another Strict Middling, another Good Middling, or perhaps one may confine itself to Low Middling or to the Ordinaries. A Mill using Middling or any other one Grade desig- nates its wants by demanding "even-running" Middling or whatever the Grade is. To say that it will use "Shy Mid- dlings" or "Full Middlings" is equivalent to expressing a willingness to accept the required Grades with slight vari- ations from their true Type. Some Mills are so restrictive in their demands for sup- plies that they practically exclude everything not exactly as ordered ; others will accept a variation of one-Quarter or one-Half Grade above and below that demanded. Mills accepting shades of variations from the Grade wanted usually require the number accepted below to be offset by a similar number above. Let it be stated, by illustration, that a Mill accepting a list of 500 bales of cotton, if 100 bales are accepted as run- ning 1-4 or 1-2 Grade below, 100 bales will be demanded as running 1-4 or 1-2 above that ordered.*^ Mills specifying even-running cotton prescribe the length of Staple also, in most instances. *'If more latitude is allowable than 1-4 Grade, on or ofE, this should be understood and agreed upon when the order is given and received. Purchases made by the mills of New England are under Eules pre- scribed by the "New England Terms for Buying and Selling American Cotton." (Sea Island excepted), and allow a, variation of "5% half a grade below the grade specified, if ofEset by an equal number of bales of half a grade above that specified." The mills of North and South Carolina buy under terms specified in their "Carolina Mall Eules," and if bought even running grades, "10% of the shipment may be one-half grade below the grade specified, if ofEset by an equal number of bales one-half a grade above the grade specified." COTTON CLASSING 91 Their terms usually being, "Middling, even-running,"**, or any other Grade and Staple usually seen, as 1 inch, or 1 1-16, 1 1-8, 1 1-4, etc., as conditions and requirentients may warrant. Spinnable values are measured in two ways: First, by the gradation and fiber tests; second, by the amount of waste, such as motes, leaf, sand, etc., which are factors gov- erning the purchase for Mills, so far as the physical qual- ities are concerned.*^ AVERAGING GRADES AND VALUES An "average" list of cotton expresses the mean quality and value of it, and may be a high or low average. An average list does not always express an everu^unning one, while an even-running list should be an average one. An average list can be composed of many Grades; there can be several Grades of one Class and few of another, or vice versa. To average a list it is necessary that the Middling Price be known as the base, and the Differences^" between the Grades relative to Middling must also be known. Average lists may take in all Low Grade Cotton, or all High Grade Cotton, and the average prove to be above or below the Middling Value. When the average shows to be above Middling, it is said to be so many "Points 'on' Mid- dling" or if it is below, so many "Points 'off' Middling." To facilitate business in making calculations for getting the value of a list of cotton, especially a large one, it is often convenient to make an average of the list. Operators in the Trade handling all Grades of cotton deal with one another on average lists basis terms, or make *8See "Merit Values," p. 77. 49See Mill Buying, Southern, p. 346. soSee Appendix, Kevision Committee. 92 COTTON CLASSING a lump sale of the whole, calling such "hog round sales;" but when dealing with the Mills, even-running Grades are usually specified. Dealers requiring High Grade Cottons will not use an average list unless it be stated that nothing below a certain Grade shall be admitted, and the same thing obtains with those handling only Low Grades, the instructions requiring that nothing above a certain Grade is wanted and accepted, unless concession in price is given on the High Grade to reduce it to the value of the Grade demanded. SECTION IX DIFFERENCES IN GRADES The expressions "differences in grades," "differences in value," are terms used in a relative way which one often hears from those interested in the Cotton Trade. The ex- pressions are well used, most applicable, and can be readily understood when tabulated forms are presented for clear- ness and to aid the memory. To find the average of any list of cotton, it is necessary that the value of the relative Higher and Lower Grades be known; they having a value of their own, as so much "on" or "off" the price of Middling. These "on's" and "off's," having a different price, are referred to as Differ- ences. Recognizing Middling as the basis, the Cotton Exchanges and the Trade establish the relative Grades. For illustra- tion, say Middling is 10 cents a pound, and showing the "Full" and "Half" Grades, the following table will exhibit relative and comparative values: COTTON CLrASSING 93 TABLE XII Grade — Price. Price. Price. Good Middling 101^ 10% IOI/2 Strict Middling _ IQi/s 10 3/16 lOi^ Middling (Basis) 10 10 10 Strict Low Middling. 9% 9% 9^/4 Low Middling 91/2 9 8I/2 The five Grades shown are sufficient to explain the dif- ferences in Grades and the three different prices shown will illustrate the idea of difference in value. In the first price column the difference in value for Strict Middling above Middling is 1-8 "up;" for Good Middling, 1-4 "up;" the difference in the second price column for Strict Middling above Middling is 3-16 "up ;" for Good Mid- dling, 3-8 "up ;" while in the third price column the differ- ence for Strict Middling above Middling is 1-4 "up;" for Good Middling, 1-2 "up." In the first price column the price "off" Middling for Strict Low Middling is 1-8, in the second column 5-8, in the third column, 3-4, leaving the re- maining fractional values respectively, 7-8, 3-8, 1-4. In the first, second and third columns, the discounts for Low Middling are respectively 1-2, 1, and 1 1-2, equal to 50, 100 and 150 points, leaving the Low Middling values 9 1-2, 9, and 8 1-2 cents. The Discounts of 1-2 and 11-2 for Low Middling are ex- ceptional both ways. The first rarely ever applies, and the second is equally out of line. Both are used here for ex- planation only, to illustrate how the Trade makes these Dis- counts. They vary with the season and the demands of the Trade. This Grade is usually subjected to a Discount ranging somewhere from 3-4 to 1 1-4 cents off. Conditions must be very abnormal to make them so slight as 1-2, or so ex- cessive as 1 1-2. 94 COTTON CLASSING The Differences applied by the Trade are not always in agreement with those promulgated by either the New York or New Orleans Cotton Exchanges. The Differences applying as made by the New York Cot- ton Exchange for delivery of cotton on Contracts are fixed for either three or nine months,^^ while those for New Or- leans Cotton Exchange follow more closely those established by the Trade, but not always in harmony with it. They are altered once a month, or oftener if thought advisable, by one or more members of the Spot Quotation Committee. The expressed Differences in the preceding are those es- tablished by the Trade and Cotton Exchanges, generally re- ferred to as arbitrary, frequently without having any re- gard to the spinnable value of this particular Grade of cot- ton, but when influenced by panic, or little demand, heavy Discounts apply. They are the ones used in the Trade, and the talent is familiar with them. Grades of cotton are distinguished by the greater or less percentage of waste carried in them, in connection with their discolorations, as previously shown. Each Grade carrying a certain or probable amount of waste can have it determined by the Mills. Determining this waste tells its spinnable value to that extent. Spinnable Values are not in line with the Differences es- tablished by the Trade. The Premiums and penalties prescribed by the Trade and Cotton Exchanges are determined by the arbitrary Differ- ences assessed for the relative Grades, and are measured to the Mills the same way. The arbitrary Differences are made upon the assumption that the more waste, the more Discount ; the more trash, the more waste. This applies to the operation of the Mills also, siSee Const, and By-LaWs New York and New Orleans Cotton Ex- changes. COTTON CLASSING 95 I but comparatively, the results do not show the same Differ- ences. ! Practical tests have been made by many Mills and tech- nical colleges in their textile departments, to show the ac- tual waste and spinnable Differences existing between the different Grades. The Clemson Agricultural College, of Clemson College, South Carolina, made tests to determine the amount of waste in the following Grades, with the results as shown : Strict Good Middling..ll.5 % Low Middling 14.75% Good Middling 12 % " Strict Good Ordi- Strict Middling 12.5 % nary ...., 16.00% Middling _ 13 % Good Ordinary 17.5 % Strict Low Middling....l3.75% Ordinary _._..18.75% As stated, the higher the percentage of waste, the lower the Grade of cotton. The tests made demonstrated the fact that the same amount of waste did not prove constant in the same Grades=2 This can arise from two causes: (1) The same Grade of cotton does not carry the same quantity of trash, and (2) gin saws running at a high speed cut or break more fibers than if running at a normal rate, producing a larger num- ber of short fibers, which are thrown out when passing through the carding machinery, or dislodged as waste, when the fibers are being paralleled in other machines. 52Glipping from Bulletin Clemson College, 1912. The variation in waste ranges from 4 per cent to 10 per cent in ML F. ; 5 per cent to 13 per cent in G. M. ; 6 per cent to 1 3 1-2 per cent in M. ; 6 per cent to 15 per cent in L. M. ; 8 per cent to 17 per cent in G. O. ; 9 per cent to 18 1-3 per cent in O. (Bulletin 4, Cotton Classing, J. G. Coman, Clem- son College, October, 1913.) Tests made by the Department of Agri- culture. Washington, corroborate pretty closely the foregoing, fur- ther emphasizing an inconstant variation of the same Grade in Mill waste. 96 COTTON CLASSING The percentage of waste given excludes the weight of the bagging and ties. Reference to the statement of results obtained by Clem- son College shows a difference of only one-half of one per cent, between the Full and Half Grades above Middling, while the differences on the Lower Grades widen as the gradation is reduced. Note that Middling has a waste of 13 per cent., Strict Low Middling, 13.75 per cent. A 13 per cent, waste is equal to 65 pounds on a 500-pound bale of cotton. Deducting 22 pounds for bagging and ties, leaves 43 pounds of actual waste in a Middling bale. A similar calculation shows a loss of 46 3-4 pounds in a Strict Low Middling, and a dif- ference of 3 3-4 pounds only between these two Grades. The other Grades, lower, have a slightly increased percent- age of loss. The spinnable Difference for the Higher Grades, as shown, is only 2 1-2 pounds to the 500-pound bale, equiva- lent to the 1-2 of 1 per cent, indicated. With a difference of 2 1-2 pounds between the Full Higher Grades, one-half such amount would represent the "Stricts," and one-fourth the "Quarter" Grades. Tabulating, the following will make clear the compara- tive usual Trade Differences with those designated as spinnable : COTTON CLASSING 97 TABLE XIII== Trade Dif . Spin. Dif . Grade Name — (Cents) (Points) (Percentage) Good Middling. % "on"=37i/2= 1% "on" Strict Middling i^ "on"=25 =1/2 of 1% "on" Middling _ Base 00 00 Strict Low Midd 5/16 "off"=31i4= %% "off" Low Middling. % "off "=871/2= %%,"off" Strict Good Ord II/2 "off"= 125= 3% "off" Good Ordinary. 2i^ "off"= 225= 41/2% "off" Ordinary 8 "off"= 300= 53^% "off" Extending this Table to get the values of the Points .and percentages expressed will show more fully the comparative differences on the bale in Dollars and Cents. TABLE XIV Trade Dif. Spin. Dif. Grade Name — (Points) CCtl-no' (Per cent) (Ct|b°a?er Good Middlings* Strict Middling Middling Strict Low Middling.. Low Middling Strict Good Ordinary.... Good Ordinary Ordinary 37i= 1.87i "on" 1 "on •= .50 "on 25 = 1.25 "on" i "on' = .25 "on 00 00 00 00 311=: 1.56i "off" J "off = .37* "off 87i= 4.37i "off" li "off = .874 "off 125 = 5.75 "off" 3 "off = 1.50 "off 225 =11.25 "off 4i "off =2.25 "off 300 =15.00 "off 5i "off =2.874 "off Note. — While the tests made by the Clemson A. & M. College were on a particular lot of cotton, and are not representative of an exact percentage, yet they corroborate very closely tests made by others for similar purposes. ssCalculated on basis of definite percentage figures given in Table XIV. siThese stated trade differences are not constant. They vary as conditions vyarrant. 98 COTTON CLASSING Comparing the Trade Differences with those indicated as spinnable would seem to show with emphasis that there is no necessity for the multiplicity of Cotton Grades now ex- tant, but as the Trade holds to its established custom, and spinnable differences are not applied in spot transactions, there is no getting away from its mandates now. Under the United States Cotton Futures Act, recently passed by Congress, nine Spot Markets are designated by the Secretary of Agriculture as those taken for determining the Differences between Grades relative to Middling. They are Augusta, Ga. ; Boston, Mass.; Dallas, Texas; Houston, Texas; Little Rock, Ark.; Memphis, Tenn. ; Montgomery, Ala.; Norfolk, Va. ; Savannah, Ga. Quotations for Middling Cotton and the Differences for other Grades, are received daily from these nine Spot Mar- kets by both the New York and New Orleans Cotton Ex- changes, and upon the average of the quotations received, the commercial Differences for each Grade is made for the day by the Exchanges. The use of the commercial Differences established as above indicated is compulsory in the settlement of Future Contracts only. Twelve Spot Markets have been designated by the Sec- retary of Agriculture as bona fide Spot Markets. Quota- tions as to the value of Middling and the relative Grades are received each day by wire from these Spot Markets by the Secretary of Agriculture. BOOK II. ARITHMETIC OF COTTON. Beginning with a Review of the Elemental Principles of Arithmetic entering into the Commercial Cotton business, and extended through an elucidation of some problems that Professionals may find of interest to review. CHAPTER I SECTION 1— DEFINITIONS— ARITHMETICAL PROBLEMS. AEITHMETICAL SIGNS For addition, the plus sign + For subtraction, the minus sign ... — For multiplication, the sign X For division, the sign -^- For equal, or equality = In connection with these signs and supplementary to them, many expressions and abbreviations peculiar to the Cotton Trade will be introduced. For the sake of brevity, they will enter largely into the statements and solutions of the problems in this volume. The student should familiarize himself with them, as their need becomes more apparent as the study advances. ABBREVIATIONS B/L , , Bill of Lading B/C - Bales of Cotton M/B. - _ -Middling Basis B/M Basis Middling^ C. I. F _ - Cash, Insurance and Freight F.O.B or fob Free on board Cwt ^Hundred weight Lbs _ - Pounds Point One hundredth (1/100) of a cent=$.0001 iM/B and B/M mean the same. 102 ARITHMETIC OP COTTON TERMS Arbitrators, Arbitration. — Arbitrators are parties desig- nated by two or more in controversy as mediators to ami- cably adjust their differences regarding the character of cotton delivered on Contract. Arbitration — ^The hearing of a cause and determining it for parties in controversy by a person or persons chosen for ttie purpose. Arbitration Committees of both the New York and New Orleans Cotton Exchanges are to "hear and decide such matters as may be referred to" them with reference to dis- putes arising among members, respecting "transactions in spot, future Contracts and free on board cotton." Each member of the committee shall be entitled to a fee of $5.00 for each case arbitrated, to be paid by the party losing in the controversy. An appeal may be taken before the Board of Appeals. This Committee has the settlement of all claims coming before it, except those in which the question of classifica- tion is involved. Matters determined by it are those di- rectly concerning the delivery of cotton on Exchange Con- tracts. Dealers handling spot cotton often settle their own con- troversies by the selection of their own Arbitrators, through mutual agreement, and such determination in the matter is final; such Arbitrators are not amenable to any Cotton Exchange. Bear, Bears. — Those who sell "short" desire the Market to decline, and exert efforts to that end, which efforts are supposed to press or bear down the price; hence the term "bear." While its real meaning expresses verb action, the word has been paraphrased into a noun signification, and those operating on the "short side," are designated as "Bears" (animals) invading the Market. ARITHMETIC OF COTTON 103 Broker, Brokerage. — Dealers buying and selling, as agents, and known as Exchange, Insurance, Produce, Stoek and Cotton Brokers. Cotton Brokers are referred to as members of the Cotton Exchange who act in the capacity of agents for buying and selling Cotton Contracts. No one can act as Broker on the Cotton Exchanges except the members composing it. Brok- ers of the New Orleans Cotton Exchanges make a minimum charge of $7.50 for buying, and the same amount for selling, each 100 bales; that is, $15.00 commission for the "round transaction," New York Brokers charge $10.00 and $20.00, respectively. This commission applies on business done for those who are not members of the Exchanges, or, in other words, "out- side business." A commission of half this sum is charged by one member for his services as Broker for another member. Under the Rules there seems to be no free trading by Brokers for themselves or customers. The brokerage is the commission for the sale or purchase of 100 B/C Contracts, and no less. Some members deal exclusively in Future Contracts, others handle both Spot and Future business. The broker- age is based on percentage. Brokers may have agents. ,, Bull, Bulls. — A class of Dealers whose operations are ex- actly opposite to those of a "Bear." A Dealer possessing Spot Cotton, or Contracts, which he has bought at a satis- factory price, wishes an advance, and exerts his influence to secure it, which action is to lift up (bull) the price, hence the term "Bull." Those operating on the bull side — ^those trying to advance the price of cotton, are called "Bulls." These expressions are framed from the same sources as those applying to Bears, but have an opposite meaning. Bulls make money on an advancing Market, and lose it on declines. Bears profit by declines, and lose on advances. 104 ARITHMETIC OF COTTON Bulls often buy cotton with the view of advancing the Market by bidding it up, for the purpose of getting a higher level on which to sell. A market advanced by such proced- ure is termed a "manipulated Market." Bulls carrying the Market to as high a point as desired or deemed consistent, reverse their efforts and sell on the advance. The moment they sell, they become Bears. Not all advances are manipulated ones, but the Trade reacts one way or the other to them. Briefly, Bulls are those who want and try to make the Market advance; Bears are those who want and try to make the market decline. Code, Cipher Code, Cotton Code. — The frequent transmis- sion of telegrams or cablegrams in connection with the Cot- ton Trade is an item of no small expense, and to resort to this means of transmitting intelligence concerning cotton transactions requires the use of a Code as an economic measure. There are several in use, among which may be mentioned Meyer's and Shepperson's, as the most prominent and uni- versally used. Private Codes are used by the talent who op- erate on an extensive scale, in addition to the others. Codes are small books, generally of size suitable for the pocket. They contain long lists of words and phrases al- phabetically arranged, similar to a dictionary in construc- tion. To each word a distinctive phrase is given, and a phrase may have an extensive meaning. To illustrate, let us use the following words for explana- tion: Abate — Market 1/8 down. Abater — Market 3/16 down. Abating — ^Market 1/4 down. About — Reduce your limit one-eighth. Destroy — Market 1/8 up. Destroyer — Market 3/16 up. ARITHMETIC OP COTTON 105 Destroying — Market 1/4 up. Ender — Better feeling in market, 10 points up. Control — Report all sales on last limit at once. Controler — Don't buy until further orders. Emzine — Mills buying freely, demand good, movement falling off. Enquire — ^What is best price fob here, basis Middling, on 100 bales? Famine — Offer you 10 1/8, usual differences fob your sta- tion, immediate acceptance. From the foregoing let us put out a "wire" (telegram) in Code and note the convenience and economy of it : TELEGRAM New Orleans, La., October 12, 1915. To Smith & Jones, Decatur, Ala. Control controller. STUART BROS. COT. CO. This wire of only two words will go at minimum rate ; it gives full advice for the moment. The operator sending it does not understand its meaning, nor can he betray any in- formation connected with it. From the few words given with their meanings, it will be seen that the Code as a means of giving out limits, ad- vice, and Market information of a private nature, is ex- ceedingly valuable, beyond its economic consideration. The Code, with its long list of words, practically covers everything connected with the Trade; but to be of value, both parties must have books of similar Code words. That is, if one has "Shepperson," the other must have it in the same edition. In the preceding "wire" it is supposed that Smith and Jones represent the New Orleans Cotton Company, and were buying on limits. 106 ARITHMETIC OF COTTON In cablegrai^s (telegrams across the ocean) the Code is indispensable between Dealers in America and those in foreign countries. Owing to the heavy expense of sending messages across the water, necessity has devised the Code, and through its instrumentality International Cotton Trade has received benefits that could never have been gained oth- erwise, and by its usefulness the Markets of the world are placed within easy reach, "C. N. D'S." (COMMERCIAL NEWS DEPARTMENT) To give the Market to all parties in the South where cot- ton is bought and sold, and to all commercial centers, re- quires that the most economical method, consistent with full efficiency, be used. The Commercial News Department (referred to as the C. N. D. Department, or briefly, "C. N. D's"), in transmit- ting reports of the Boards of Trade, Stock and Cotton Ex- changes, uses a Code of its own, and when reports are made, they are followed with the time of day the report was taken. These reports are sent directly from the large Cotton Exchanges and translated for all who care to take and pay for them. The charges are usually so much a month to patrons. In quoting cotton, the report from Liverpool is first posted, then New York and New Orleans follow. The first reports are the Opening Calls, followed every few minutes with the varying quotations; then the Noon Call, with varying fluctuations, until the "Close" or Closing Call, These quotations are all for Futures. After the "Close," the Receipts at the leading Ports, and the Spot price for Liverpool, New York and New Orleans are given. Sometimes the price for Spots is given for Galveston, Hous- ton, Memphis, Augusta, Savannah, Bremen and Havre, more especially for the leading daily papers. This Code is different from the regular Cotton Code, and ARITHMETIC OF COTTON 107 is used especially for the transmission of Market Reports. In quoting the months, one letter for each month usually expresses it, preceded by the name of the Market from which it comes, and followed by the time of day. The telegraph operator translates the Code for the Trade, hence it is not so material whether the Trade is acquainted with it or not, he usually writing : "Jan. 13, 12-13, Feb. 13, 14-15," etc., for the market price. The months given in the C. N. D. Code are as follows : QUOTED MONTHS F Jan. July N G Feb. Aug Q H Mch. Sept , U J Apr. Oct V K ...May Nov X M _.. June Dec _ Z The Opening Cotton Market would be expressed some- thing like this in the Code: N. Y. open V 13.15-16 X 13.17-18 Z 13.21-22 F 13.16-17 10 a. m., etc. N. O. open U 13.12-13 V 13.14-15 X 13.17-18 Z 13.19-20 F 13.22-23 9:10 a.m. Similar reports are made for the Noon Call and the Close, at which time the Spot Market is given for New York and New Orleans. The Liverpool Market is 5 hours ahead of New York and 6 hours ahead of New Orleans. New York opens at 10 a. m., while New Orleans follows an hour later, opening at 9:05 a. m. for the transaction of business. Port receipts and the tone of the Market usually accom- pany the Close and Spot quotations. Contracts, Agreements. — ^An understanding or agreement between two or more parties to perform certain stipulated acts. With reference to dealings in cotton, they may be two- 108 ARITHMETIC OF COTTON fold : They may refer to deals between individuals or cor- porations who execute Contracts to sell and deliver, buy and receive cotton, one from another; or they may have refer- ence to Cotton Exchange Contracts which are dealt in as commodities, and while its stipulation prescribes the deliv- ery or receipt of cotton on them, yet they may be settled as stated in Future Sales.^ Contracts of the latter character are made between in- dividuals or corporations and members of some Cotton Ex- change, or between members. Discounts. — (1) The difference between the prices of Spots and Futures. If the price of Spot Cotton in New York is 9.65 March, and the quotation for May cotton is 9.33, the Discount for the May Option under March Spots is 32 Points. (2) Middling being the basis, the Grades un- der it are inferior in quality with a corresponding deprecia- tion in value, which values of the Lower Grades are Dis- counts off the basic price. (3) Cotton Merchants selling cotton for future delivery in some instances protect the sales by buying Futures for the same number of bales. Were Anderson and Smith to sell 5,000 bales of cotton in August, to be delivered in September, October and Novem- ber at 10 cents at the ship's side in New Orleans, and if at the time of this sale August cotton is worth 9.80 as the pub- licly quoted price (the sale being effected at 20 Points on August), and they buy Octobers at 9.50 as a Hedge, they get them at 50 Points Discount from the price for Spots. Factors, Cotton Factors. — Those interested in the Cotton Trade who do not buy cotton direct, but instead, receive and sell for others, who consign cotton to them. As Commission Merchants they make a charge for their services based on a small percentage of the amount of business handled.*. Factors engaged in handling cotton exclusively, are known as Cotton Factors. Factorage, commission allowed. 2See Future Sales, Book IV, pp. 316, 333. 3See p. 279. ARITHMETIC OF COTTON 109 Flat Cotton. — The original bale of cotton as it comes from the press before compressing. Transportation companies prefer, for economic reasons, to handle cotton in compressed form, compressing it at their expense, if not otherwise instructed. Conditions sometimes require that cotton be shipped "flat" (without compressing) , and if so, the words, "To be shipped flat," or "Ship flat," must appear on the face of the Bill of Lading. Futures, Future Sales. — Contracting to sell cotton to be delivered at some future time. The phrase is applied to deals originating with the Cotton Exchanges, and has direct reference to Contracts dealt in by them. They are dealt in as one would deal in Stocks, Bonds, Notes, Mortgages, etc., with the exception that Contracts bought or sold through the Cotton Exchanges are often settled for by the terms ex- pressed; transferred from one to another, or canceled by offset.* Sales or purchases of Contracts for future delivery are made only by the New York and New Orleans Cotton Ex- changes, but independent of, and outside of these Ex- changes, a large volume of spot business is done annually between Spinners and Cotton Merchants, who bind them- selves to a Contract which implies future delivery of cotton, and they are not subject to any control beyond the terms of their specific agreements. Spinners purchasing from Merchants direct, will not do so, unless the Merchant be financially strong or gives assur- ance the Contract is hedged.^ Hedge, Hedging. — ^To protect one's purchase or sale of cotton; to accomplish this, one resorts to the New Orleans or New York Cotton Exchange, securing from a member of one or the other a Contract for some designated future month, calling for the same number of bales as the number of spot bales on hand, or in a contemplated purchase. *See Del. Spot Cot. p. 318. "See Mill Buying, p. 241 et seq. MB— 5 110 ARITHMETIC OF COTTON A Contract bought in one Month may be hedged by dis- posing of it and taking some other forward month. One to offset the other, must be of like character and equiv- alent value, that is to say, if the first Contract bought stipu- lates 100 bales of May cotton, the same may be hedged, and possibly a profit gained, by settling for that month and taking 100 bales of July; were a loss to occur on May, an equal gain should accrue on the July sale. This form of hedging, would come under Speculation,^ but a similar pro- cedure in protecting spot cotton is often resorted to in spot transactions as a business practice. The stud.ent may infer from the statements given explan- atory of the Hedge^, that the process of hedging is quite a simple and easy one, which as a matter of fact may be so recognized, but it will be recalled that each original Con- tract purchased cost at least $100 as a Margin; that the exchanging from one month to another cost $100 if the Mar- ket has declined; that a decline of 17 points (if Dealer is not well rated) , will call for an additional $100, and a subse- quent decline of a similar number of points, calls for a re- margin of like amount. For the protection of spot cotton, the payment of these sums for hedging facilities is not objectionable, if parities were undisturbed; but those who handle spot cotton and try to protect themselves against loss by resorting to the Hedge, find that disparities so often confront them as to practically defeat the purpose for which the Hedge was intended; and for this reason a large percentage of small Merchants throw their cotton upon the Market as fast as purchased, to avoid losses resulting from declines that may appear at any moment, and never use the Hedge. Invoice. — A bill or statement that describes in detail the shipment of cotton ; generally sent through the mail by the eSee Speculation, p. 328. 7See Selling Hedge, p. 323. ARITHMETIC OF COTTON 111 local Bank attached to the Draft and B/L, and usually pre- cedes the arrival of the cotton. It gives the date, the num- ber and weight of each bale, total weight, sometimes the classification, and full value when payment is requested be- fore the arrival of the cotton at destination. Invoices are sent direct from Shipper to Consignee if no Draft is drawn against the cotton. Some Dealers prefer forwarding the Invoice direct to Consignee with their letters of advice. If a Draft is made to cover the value of the shipment, it is sent under separate cover by the Bank. Long. — Long cotton signifies the amount of actual cotton one has in his immediate possession. If Jones has 100 B/C on hand, he is "long" 100 bales. Margins.- — (1) Payments required to protect a Broker for the purchase or sale of a Contract, or to maintain them after purchase or sale. The usual Margin is $1.00 a bale, but often is as high as $5.00 a bale, when fluctuations are frequent and wide. Both parties to a Contract have a right under the Rules to call for a Margin. (2) The difference between the price paid and that received for cotton. If cotton be bought for 81^ cents and sold for 8, the marginal difference is % cent loss; if it is bought for 8 cents and sold for 81/^, the gain is 14 cent Margin. (3) The difference between the price of Spot Cotton and that of Futures. Market Closes. — The last figures posted on the Boards in the Cotton Exchanges for the day's quotations, referred to as the "Closing Calls," or more often as "The Close." Market Opens. — The first figures that are chalked (put on the blackboard) in the Cotton Exchanges at the begin- ning of the day's business, and referred to as the "Opening Calls." Parity, Equal Values. — If Middling cotton is quoted in New Orleans at 9.80 for spots, and 30 points are necessary as a freight charge to put it in New York, 30 added to 9.80 would give 10.10 as a parity value for spot cotton in New York. 112 ARITHMETIC OF COTTON If March cotton is quoted at 9.75, and May futures at 9.60, the parity difference is 15 points. If March cotton is quoted at 9.75 in that month, and Middling Spots registered at 9.85 for the same time, the parity difference between the two is 10 points. Premiums. — (1) The profit offered by a Buyer to a Seller as an inducement to secure a lot of cotton. If the basis price is 10 cents in the open Market, and a cotton Merchant has 500 bales for sale, a Buyer might offer a Pre- mium of 1/8 or 3/16 to secure the list, if it is shown to be practically near what the Buyer desired. (2) The Grades of cotton ranging in quality above Middling, and known as Premium Grades, whose values are termed Premium Values. Reclamations. — Claims made for shortage in weights, class, or deviation in the cotton from the samples submitted. Should a consignee pay full value on receipt of the Invoice and B/L for a shipment of cotton, and find, after weigh- ing at destination, that it is short 100 pounds, it is clear he has paid for 100 pounds too much. In such a case he would reclaim from the shipper the value of the 100" pounds. Like- wise, when the classification on the outturn shows not to be as high as stated in the Invoice, or when the cotton is bought on sample and shows on arrival not to come up fully in class to it, then in both instances reclamations would be made on the Seller for the value of the differences in class and variation from type samples on which the cotton was sold. Shipments of cotton into foreign ports have reclamations drawn against them if over-tared with an excess of wrap- ping weight, short weight of cotton or variation of tjT)es submitted. Scalpers. — Those who mediate between primary Buyers and Sellers, and act in capacity of both Buyer and Seller. They may or may not be recognized as regular Dealers. Short, Short Cotton, Shorts. — These terms imply that the Seller has sold cotton before getting it in his possession. ARITHMETIC OF COTTON 113 and he is "short" the amount of cotton sold ; when received for delivery, he has acquired his "Short Cotton ;" those op- erating on the "Short Side," speaking collectively, are called "Shorts." Short Sellers make money on declines in the Market, and lose on advances. If no rise or fall in price, no gain or loss results. Short sales can be made in real or Future Cotton, with gains or losses occurring on Future Cotton the same as on spot sales. Short Sellers sometimes find the Market does not decline as expected, but instead, remains practically steady or ad- vances. In the former case they make no gains ; in the lat- ter they suffer a loss. Seeing the Market advancing. Shorts often rush in to buy, and in so doing advance the Markets against them- selves and suffer self-imposed losses." Spot Cotton, Spots. — Denote about the same thing aa "long" cotton ; in the preceding, Jones is "long" 100 bales ; that is, he has 100 bales of actual cotton in his possession, expressed in the vernacular of the Trade as "Spot Cotton," or 100 bales of "Spots." Shippers Order, Notify. — ^These words must be on the face of a B/L where the Shipper desires to draw through his local bank for the full or part value of his cotton before it reaches destination. If so worded, the Shipper has a legal advantage, and the bank a protection. The local bank taking care of a shipment operates through some bank at or near destination, to which the cotton is billed. On receipt of the Documents^ the receiving bank notifies the transportation company, and also the consignee, both of whom are put on notice — ^the first, not to deliver the cotton to consignee until the payment of the Draft; the second, that a Draft is drawn on him for the whole or part sSee "Short. Selling' Spot Cotton," p. 273. 9"Sliipping' Documents," Book III, p. 280. 114 ARITHMETIC OF COTTON of the cotton in the shipment. When the Draft is paid the B/L for the cotton will be surrendered, and then con- signee can receive the cotton from the railway company. This is the usual procedure for American domestic ship- ments. Those destined for foreign markets are handled in a similar manner, except that Time Drafts are usually sold to some American Bank which makes a specialty of hand- ling such accounts, on receipt of all Documents properly in- dorsed and authenticated.^" Where cotton Merchants, or Factors, as consignees, are known to be men of undoubted financial ability, it is ac- cepted as a general practice, by local banks, to give the Shipper full credit for the face of his Draft ; but if the con- signee be practically unknown or of doubted ability to meet the Draft on presentation, it is taken by the local bank for collection only. A Market showing rapid and wide fluctuations downward necessarily leads banks to exercise caution in payment of Drafts drawn on consignments, unless the consignee has given instruction to draw for a definite sum, and is finan- cially able to protect the Draft himself. If J. H. Hicks ships 50 B/C from Talladega, Ala., valued at $2,500, to W. D. Thompson & Co., New Orleans, drawing through his local bank for this amount, the Talladega bank would give Mr. Hicks credit for this sum the same as if he had deposited that much cash, if the bank recognizes Thompson & Co. as trustworthy for this amount; other- wise the Draft would go to New Orleans for collection. Splits. — Those types of cotton that can not be classed as clear-cut Half Grades (Stricts), and" known to the Trade as Quarter Grades,^^ designated by the Cotton Exchanges as "Fully" and "Barely."^= A good style of LowMiddling, not sufficient in character loSee p. 280. iiThe U. S. Standards do not recognize the Quarter Grades. i2See Appendix. ARITHMETIC OF COTTON 115 to be classed as Strict Low Middling, would be known as Fully Low Middling. Straddles or Spreads. — These terms mean the purchase and sale of one month against another. One desiring to "Straddle" the Market, may buy a July in New Orleans and sell the same month in New York, or sell in New York and buy the same month in Liverpool. COMMON AND DECIMAL FRACTIONS. Note. — Believing it advantageous to the student to be familiar with the Common and Decimal fractions before attempting to master the art of Cotton Grading, and assuming he is grounded in the rudiments of them, before taking up this work, the details of their operation vylU not be given. SECTION II COTTON QUOTATIONS AND PROBLEMS. TABLE XV NEW ORLEANS SPOTS Xew Orleans, May 13 (1913). — The Spot Market closed steady, 1-8 up, sales 930 bales ; stock, 68,503 bales. Quotations : Today. Yesterday. Last Year. Low Ordinary 8 15/16 8 13/16 8 3/8 Ordinary 9 3/4 9 5/8 9 3/16 Good Ordinary 11 3/8 11 1/4 10 5/8 Low Middling 11 7/8 11 3/4 11 5/16 Middling 13 5/16 13 3/16 11 15/16 Good Middling 13 11/16 13 9/16 13 1/2 Middling Fair 13 5/16 13 3/16 13 NEW ORLEANS FUTURES The following are the opening and closing quotations on the New Orleans Cotton Exchange, compared with the close of ye.sterday. Tone steadv : Close. Yes. Close. 12.24-25 12.35b 12.06-08 12.10-12 12.02-03 13.06-07 11.62-63 11.66-67 11.27-39 11.33-34 11.15-16 11.20-31 11.15-17 11.20-33 11.14-15 11.30-31 11.18-19 11.33-35 116 ARITHMETIC OF COTTON May 13, (1913). Open. May 13.31 June 13.10-13 July 13.07ai3 August 11.66-67 September 11.33-35 October 11.21-22 November 11.20-33 December 11.20-21 January 11.23bi3 isPrices (a) asked, and (b) bid. February 11.30-23 11.15-17 11.30-22 March 11.31-33 11.35-36 11.38 In their communications, and in giving out the Markets, Dealers use divided decimal terms, with the use of the pe- riod for a separating point in the fraction. In making calculations ascertaining the value of cotton, a limit was placed on the use of the Decimal to the fourth place by the New York and the New Orleans Cotton Ex- changes, prescribing that all cotton dealt in by them shall be calculated in cents and Decimal Fractions of a cent, ob- serving that no Decimal Fraction less than one-hundredth (1-100) of a cent a pound be allowed. A Cent being 1/100 of a dollar, and a Point being 1/100 of a cent multiplies the fraction to 1/100 of 1/100, equaling one-ten thousandth (1/10,000) of a dollar, expressed deci- mally, $.0001, reducing in this way the Decimal Fraction to the fourth place. This one-ten thousandth ($.0001) of a dollar has given rise to the introduction of this Fraction, designated as a "Point," and it will have a conspicuous place in this work. To readily understand the relative value of the Point in comparison with the Dollar and Cent, the following Table is given : ARITHMETIC OF COTTON 117 TABLE XVI TABLE OF POINTS 1 Point equals .0001 of a Dollar 2 Points equal .0002 of a Dollar 3 Points equal .0003 of a Dollar 4 Points equal .0004 of a Dollar 5 Points equal .0005 of a Dollar 6 Points equal .0006 of a Dollar 7 Points equal .0007 of a Dollar 8 Points equal .0008 of a Dollar 9 Points equal .0009 of a Dollar 10 Points equal .0010 of a Dollar= 1/10 Cent 20 Points equal .0020 of a Dollar= 1/5 Cent 25 Points equal .0025 of a Dollar= 1/4 Cent 50 Points equal .0050 of a Dollar= 1/2 Cent 75 Points equal .0075 of a Dollar= 3/4 Cent 100 Points equal .0100 of a Dollar= 1 Cent 250 Points equal .0250 of a Dollar= 2 1/2 Cents 300 Points equal .0300 of a Dollar= 3 Cents 500 Points equal .0500 of a Dollar= 5 Cents 1000 Points equal .1000 of a Dollar=10 Cents For convenience the Points are generally expressed in concrete numbers, as 2 Points, 3 Points, 614 Points, in- stead of the long Decimal showing equivalent values. Where Cents are connected with the Points, the Decimal notation is usually disregarded as indicating the value of the Fraction, and instead the dot is placed so as to divide the Fraction, the reading of which calls into use both the Cents and Points. 118 ARITHMETIC OF COTTON Take the following Decimals : .1002 of a Dollar .0601 " t i .1220 " t i .0278 " i i .1525 " t t .1875 " t t .0500 " t i For convenience of expression and to indicate the posi- tion of the Point relative to the Cent, the following state- ment of the same Decimals is given and the manner of read- ing as indicated. Ten Cents and 2 Points, 10.02, is read ten naught two. Six Cents and 1 Point, 6.01, is read six naught one. Twelve Cents and 20 Points, 12.20, is read twelve twenty. Two Cents and 78 Points, 2.78, is read two seventy-eight. Fifteen Cents and 25 Points, 15.25, is read fifteen and a quarter. Eighteen Cents and 75 Points, 18.75, is read eighteen and three-fourths. Five Cents and no Points, 5.00, is read five cents. The dot separating the numbers should not confuse the student in making his calculations. It should be remem- bered that all Fractions involving the Point carry the Deci- mal to the fourth place, and the Decimal point considered in pointing off the result as recognized in all computations, according to the rules of arithmetic. •For more readily understanding the comparative value of the Common with the Decimal Fraction, both which find daily use in the Cotton Trade and Cotton computations, the Table illustrating the same follovirs: ARITHMETIC OF COTTON 119 TABLE XVII (t it It ti (< II it tc it tt COMMON FRACTIONS WITH DECIMAL EQUIVALENTS OF A DOLLAR 1/32= .03125 of a Dollar 1/16= 2/32= .0625 " " " 3/32= .09375 " " " 1/8=2/16= 4/32= .125 " " " 5/32= .15625 " " " 3/16= 6/32= .1875 7/32= .21875 1/4=2/8=4/16= 8/32= .250 9/32= .28125 5/16=10/32= .3125 11/32= .34375 3/8=6/16=12/32= .375 13/32= .40625 7/16=14/32= .4375 15/32= .46875 1/2=2/4=4/8=8/16=16/32= .500 17/32= .53125 9/16=18/32= .5625 19/32= .59375 5/8=10/16=20/32= .625 21/32= .65625 11/16=22/32= .6875 23/32= .71875 3/4=6/8=12/16=24/32= .750 25/32= .78125 13/16=26/32= .8125 27/32= .84375 7/8=14/16=28/32= .875 29/32= .90625 15/16=30/32= .9375 31/32= .96875 1=2/2=4/4=8/8=16/16=32/32=1.000 it t( ti ti ti tt ti tt it ti ti tt it ii it ti tt tt Retaining the tabular form of Decimals for convenient reference, the same are compared with the Common Frac- tions for equivalent value, and extended to show the value of the Point in connection with both Fractions of same value. 120 ARITHMETIC OF COTTON TABLE XVIII DECIMAL FRACTIONS WITH EQUIVALENT VALUES IN COMPAR- ISON WITH DOLLARS, CENTS AND POINTS. .OOO614 of a Dollar= 1/16 of a Cent= 6l^ Points .00121/2 of a Dollar= 1/8 of a Cent=12i/2 Points .00183^ of a Dollar== 3/16 of a Cent=183^ Points .0025 of a Dollar= 1/4 of a Cent=25 Points .00311/4 of a Dollar= 5/16 of a Cent=31i4 Points .00371/2 of a Dollar= 3/8 of a Cent=37l/2 Points .00433^ of a Dollar= 7/16 of a Cent=433^ Points .0050 of a Dollar= 1/2 of a Cent=50 Points .0056 1^ of a Dollar= 9/16 of a Cent=56l4 Points .00621/2 of a Dollar= 5/8 of a Cent=62i/2 Points .006834 of a Dollar=ll/16 of a Cent=6834 Points .0075 of a Dollar= 3/4 of a Cent=75 Points .008114 of a Dollar=13/16 of a Cent=81i4 Points .OO871/2 of a Dollar= 7/8 of a Cent=87l/2 Points .009334 of a Dollar=15/16 of a Cent=9334 Points .0100 of aDollar= 1 Cent=100 Points EXAMPLES INVOLVING THE USE OF THE CENT — ^DECIMAL EQUIVALENT $.01=100 POINTS. Note. — Should any difficulty arise in making calculations for cot- ton, the quotations for which are connected with Common Fractions, let the student apply the corresponding' Decimal for same value, as shown in the preceding Tables. The result will be the same. Problems for cotton calculations in which the whole cent, 1/2, 14, Vs, 1/16 and 1/32 part are used, fall under the observation, annually, of the Southern cotton Grower, and are made without reference to Grade. Rule. — For a single bale, multiply the weight by price; two or more bales of different qualities, add the weights of the separate Qualities, and multiply them by the price. ARITHMETIC OF COTTON 121 Add the values of the different-lots to find the total value of all. PROBLEMS. Ex. 1. A sells 1 B/C weighing 520 pounds at 10c a pound. What amount of money did he receive? — Ans. $52.00. Ex. 2. Two B/C weighing 516 and 534 lbs. respectively, were sold for 9c a pound. What was their value? —Ans. $94.50. Ex. 3. Tom Adams was offered 9c a pound for his 6 B/C, which he sold 30 days afterward for 10c a pound, but which lost in weight 30 lbs. The original weights were 560, 5.86, 522, 518, 530 and 494 lbs., respectively. Did he gain or lose by holding his cotton 30 days, and how much? —Ans. Gained $29.10 Ex. 4. John Anderson sold 2 B/C weighing, each, 535 and 515 lbs., at lie; 3 B/C weighing, each, 521, 485 and 514 lbs., at 10c. He owed for ginning $15, and 10c a bale for weighing. How much, did he receive for the cotton, and what amount did he have left after paying the charges? — ^Ans. Total received, $267.50 ; net received, $252.00. Ex, 5. Frank Kelly refused an offer of 10c for 4 B/C, which he sold 2 months later at 9c a lb., on which charges for insurance, 35c a bale, and yardage, 20c a bale, had ac- cumulated, and- lost 10 lbs. in weight. The weights at first were 2010 lbs. What was his loss? —Ans. $23.20. Ex. 6. A farmer was offered 10c a lb. for 21 B/C weighing 11,340 lbs., with no expenses deducted. He sold .4 months later for lie a lb. The charges were, insurance, 30c; weighing, 10c, and delivering, 10c a bale. The cotton gained 60 lbs. in weight. What was his gain? —Ans. $109.50. Ex. 7. Jones & Brown, ginners, having refused 9c a lb. for 40 B/C, sold 5 months later for 10c a lb. The origi- 122 ARITHMETIC OP COTTON nal weights were 20,960 lbs., on which there was a gain of 140 lbs. in final sale. The charges were: Insurance, 60c; sampling, 10c; commission, 15c a bale. What did they gain by holding? — Ans. $189.60. Ex. 8. What would be Jones & Brown's loss if they re- fused 10c a lb., hold 5 months, sell for 9c a lb., and lose 140 lbs. in weight, with charges and original weights same as in Ex. 7? —Ans. $256.20. Ex. 9. Fred Smith is offered lie a lb. for 4 B/C ; 10c a lb. for 5 B/C; 9c a lb. for 6 B/C; 8c a lb. for 10 B/C, or 9c a lb. average for the entire lot. Cotton aver- ages 500 lbs. per bale. Should he accept the latter price, and what the loss ? —Ans. No. Loss $15.00. EXAMPLES INVOLVING THE USE OF THE HALF CENT — ^DECIMAL EQUIVALENT $.005=50 POINTS. Note. — By reference to Tables XVI and XVIII, it will be observed that i Cent is represented as .0050 of a, Dollar, whicb in value is the same as $.005 shown in the caption. Ex. 1. Three B/C weighing, respectively, 520, 535 and 485 lbs., were sold for 10 l-2c a lb. ; 2 B/C, weighing 510 and 525, at 9 l-2c a lb. What was the total value? —Ans. $260,021/2. Ex. 2. A Grower sold his 7 B/C, which had been ex- posed to the weather for several months, for llV^c if not damaged, but on delivery, they showed to be badly injured. It was agreed to take nothing off in weight, but reduce the price V2C a lb. The cotton weighed 3,650 lbs. What was realized from the sale? —Ans. $401.50. Ex. 3. What was the Grower's loss for weather or "country damage" on his cotton in Ex. 2 ? —Ans. $18.25. ARITHMETIC OF COTTON 123 Ex. 4. A man sold 5 B/C weighing 2,640 lbs. at 91/2C, for which he was offered the week previous Sy^c a lb. How much was his gain by holding 1 week? — A'ns. $26.40. Ex. 5. In a competitive bid for a list of 15 B/C, two Buyers ran the price from 9c to 9i^c a lb. What did the Seller realize on the sale, the total weight being 7,815 lbs. ? — Ans. $742,421/2. Ex. 6. A Buyer bought 50 B/C at an average of 7i/^c, which he sold 6 months afterwards at 91/2C a lb. His ex- penses were $1.50 a bale. What was his gain, the cotton weighing 26,000 lbs. —Ans. $445.00. Ex. 7. A Farmer having 6 B/C, sold 2 for 8c ; 2 months later, 2 for 8V^c; 3 months after this he sold 2 for 91/2C. The first two weighed 1,125 lbs., the second two 990 lbs., and the last two 1,105 lbs. What was the amount realized? —Ans. $279,121/2. Ex. 8. Will Smith sold 12 B/C for 71/2C per lb. He paid his landlord 14 for rent, and % of the ginning, which was $3.00 a bale. What did the cotton bring him after pay- ing the expenses for ginning and rent? Weight of the 12 bales was 6,190. —Ans. $321.183^. Ex. 9. John Hamlin sold his entire crop of cotton in the spring at lOi/^c a lb., to be delivered as gathered in the fall. He made 12 bales that weighed 6,240 pounds. At delivery time he could have sold 5 bales for 12c; 3 bales for III/2C; 2 bales for 10c and 2 bales for 91/2C a lb. Did he gain or lose by his trade, and how much? The bales averaged 520 lbs. —Ans. Lost $39.00. 124 ARITHMETIC OF COTTON EXAMPLES INVOLVING THE USE OF THE QUARTER CENT — DECIMAL EQUIVALENT $.0025=25 POINTS. Note. — Eemeraber that four Decimals must be used when the Point is brought into requisition. Ex. 1. Tom Brown sold 5 B/C weighing 2,580 lbs. at 814c. What was their value? — Ans. $212.85. Eemaeks. — The 8 Cents are expressed thus — $.08. The 25 Points, as shown above, thus- $.0025. Eight Cents and 25 Points, thus $.0825. Multiplying the weight by this Decimal will give the total value. Ex. 2. Two B/C weighing 1,030 lbs., were sold for 9%c and one bale of 495 lbs. weight for 1014c. Find the total value. —Ans. $151.1614. Ex. 3. A Buyer bought a list of 30 B/C over the tele- phone for which he paid 9i4,c, thinking it would average Middling. On inspection after receipt, he found it would bring 9V^c. What was his gain if the cotton weighed 15,480 lbs.? —Ans. $38.70. Ex. 4. Henry Jones took 1,500 lbs. of seed cotton to the gin for which he was offered 3^c per lb. Proof showed it "thirded itself" in passing through the ginnery. The cost for ginning was $3.00. He sold the bale at 10i4c per lb., and the seed at the rate of $16 per ton. What was his gain or loss by having the cotton ginned? — Ans. Gain $7.50. Ex. 5. Would Jones have gained anything had he sold the cotton for 9%c a lb. and the seed at $12 per ton? — Ans. Gain $3.00. Ex. 6. A Farmer had a bale of damp cotton ginned, causing the lint to show "gin cuts" and "naps ;" had it been ginned dry it would have brought IOI/2C but owing to im- perfect ginning, it sold for 10i4,c, and 10 lbs. were de- ducted for dampness. The original weight was 560 lbs. ARITHMETIC OF COTTON 125 How much loss to this man for having his cotton ginned damp? — Ans. Loss $2,421/2. Ex. 7. A Grower offered 3 B/C for sale weighing 516, 522 and 532 lbs., for which he was offered 9i^c, gin weights, or 9i/ic and have the cotton re-weighed at the public scales ; he sold on gin weights. What was his gain or loss? The re-weights were 506, 519 and 530 lbs. — Ans. Loss $2.50. Ex. 8. Tom Sanders found the market down i^ (25 Points) when he offered his 4 B/C for sale, which weighed 2,620 lbs. What was his loss by the decline if he sold for 91^0? — Ans. Loss $6.55. Ex. 9. Mr. Henderson offered to take 10c a lb. for his 5 B/C and deduct 30 lbs. for damage. The Buyer made a counter offer of 9%c with no deduction in weights. The cotton weighed, without deduction, 2,580 lbs.. Mr. Hender- son accepted the Buyer's offer. Did he gain or lose? — ^Ans. Lost $3.45. Ex. 10. A Tenant rented 40 acres of land at $3.00 an acre, on which he produced 10 B/C weighing 5,390 lbs. He sold the cotton at 8i4,c and paid for ginning $32.34. Would he have gained or lost in the transaction had he rented to pay 1/4 of the cotton, if he and the landlord had paid, each for his own ginning? — Ans. Gained $16.92 to pay % rent. EXAMPLES INVOLVING THE USE OF THE ONE-EIGHTH CENT. DECIMAL EQUIVALENT $.00125=121/2 POINTS. Ex. 1. A man sold 1 B/C, 560 lbs., for 9%c per lb. What amount of money did he get? —Ans. $51.10. Note. — By reference to Table XVIII, it will be noted that J of a Cent is, Decimally, .00134 of a Dollar, or to make a pure Decimal, it will be $.00135. Nine Cents equals $.09, then 9J Cents equals $.09125, which if multiplied by the weight, gives the total value. 126 ARITHMETIC OF COTTON Ex. 2. Find the value of 1,600 lbs. seed cotton at 3l^c alb. — Ans. $50.00. Ex. 3. Mr. Smith sold 8 B/C for lli/ic, after re- fusing 11 %c by the first Bidder. What did he gain by selling to the second Buyer? The cotton weighed 4,120 lbs. — ^Ans. $5.15. Ex. 4. Mr. Anderson sold 1 B/C, 512 lbs., at 91/2C a lb., 1 bale, 520 lbs., at 914c, and 1 bale, 560 lbs., at dYsc. How much money did he get for all? —Ans. $147.84. Ex. 5. Jones & Adams bought 50 B/C weighing 25,500 lbs., on which they made a profit of i/^c. What was their gain on the whole? —Ans. $31,871/2. Ex. 6. John Knox, having 900 lbs. of seed cotton, bought 600 lbs. more to make a bale. He paid 3%c for the 600 lbs. Including the weight of the bagging and ties, the cotton "thirded itself" when ginned. The bale was sold for lOYsc per lb. and the seed at $20 per ton. What did Mr. Knox gain on the seed cotton bought? —Ans. $5.50. Ex. 7. Henry Brown sold 1 B/C, 520 lbs., at 6%c per lb. What was its value? —Ans. $34.45. Ex. 8. In a sale of 10 B/C, 3 weighed 1,616 lbs. and brought lOi/sc; 4 weighed 2,120 lbs. and brought 9%c; 3 weighed 1,560 lbs. and sold for 9i/^c. What was their total value? —Ans. $515.32. Ex. 9. Three B/C are worth $1613/8 ; 2 bales $1021/8 ; 5 bales $2523/8. What is their total value? —Ans.. $515,871/2. Note. — See value of | in Tables XVTI and XVIII, and add as in simple addition. ARITHMETIC OF COTTON 127 EXAMPLES INVOLVING THE USE OF THE ONE-SIXTEENTH CENT. DECIMAL EQUIVALENT $.000625=614 POINTS. Note. — The following- Problems, like the preceding, are solved under Rule 1 : Ex. 1. Find the value of 1 B/C, 534 lbs., at 7 l/16c. — Ans. $37.71 3-8. Ex. 2. One B/C, 544 lbs., sold for 9 l/16c; another of 528 lbs. for 8 l/16c. What was the value of both? —Ans. $91.87. Ex. 3. A Grower refused 814c a lb. for his cotton, but sold it the following day for l/16c less. His 10 bales weighed 5,160 lbs. What did he lose by not selling the first day. —Ans. $3,221/2. Ex. 4. Mr. James had 4 B/C of 4 different Grades. One bale, 544 lbs., 9 l/16c; 1 bale, 540 lbs., 9c; 1 bale, 640 lbs., 8 15/16c; 1 bale, 528 lbs., 8%c. What was the total value ? —Ans. $201.96. Ex. 5. Three B/C weighing 516, 524 and 520 lbs., were sold for 8 3/16C ; 2 B/C, 519 and 541 lbs., for 8 l/16c. What was their total value? —Ans. $213.183^. Ex. 6. A list of 100 B/C, high grade, sold for 3/16 above the market quotation. The weights being 52,480 lbs., what was the gain in Premium value? —Ans. $98.40. Ex. 7. A Cotton Buyer classing 40 B/C after sunset, found on inspection of the cotton in a good light, that he had made an error, and offered the Seller 1/16 to release him from the trade. The Seller accepted. The cotton weighed 20,480 pounds. What did the error cost the Buyer? —Ans. $12.80. Note. — One-sixteenth of a Cent is .0006i of a Dollar. Multiply the 'weight by this Decimal of a dollar, or divide the total weight by 16 and point off 4 Decimals in the answer. The result will be the value of the cotton at 1/1 6c. 128 ARITHMETIC OF COTTON Ex. 8. A Buyer received a limit (price) of IOI/2C a lb. B/M (See Abbreviations), on which to buy cotton.- He sold "short" 100 bales on it. The market declined 25 Points during the day. On his limit he bought 40 bales, 20,320 lbs., at 10 7/16c; 28 bales, 14,560 lbs., at lOS/gc; 32 bales, 16,160 lbs., at 10l^c. What did the Buyer gain on the day's business? — Ans. $71.30. Ex. 9. A Farmer rented 50 acres of land "on halves," from which he gathered 20 B/C, averaging 500 lbs. per bale, which he sold at 10 8/16c. The landlord gave his half of the seed to the tenant for hauling 10 bales to the gin and to Market. The ginner charged 60c per cwt. for ginning, which he gave, in addition to the payment of $3.00 for the seed in each bale of seed cotton. The Farmer sold 17 bales of seed, put 1,500 lbs. of seed cotton in each bale, and hired 14 bales picked at 70c per cwt. What amount of money did he get for his part of the crop and hauling for the land- lord? —Ans. $404,371/2- Explanation — Twenty bales of 500 lbs. eacli=30X 500=10,000 lbs. 10,000 lbs. at 10 3/16C =$1,018.75 Eeceived $3 a bale for 17 bales 17X3=value of seed = 51.00 Receipts for cotton and seed ^$1,069.75 Paid for ginning $ 9.00 ' Paid i of cotton to landlord $509.37J Paid for picking 14 B/C at 70c 1,500 lbs. at 70c=$10.50 14 bales=14 X $10.50 =$147.00 Total Paid $665.37| $1,069.75— $665.37J=$404.37J Ans. Ex. 10. August Wilhof sold 4 B/C, weighing 1,584 lbs., on Wednesday, to be delivered the following Saturday, at 11 5/16c all around. On the way to the market the cotton accidentally caught fire. Repacking it a week later, the ARITHMETIC OF COTTON 129 cotton lost in weight 512 lbs.; the ginner charged $1.00 a bale for re-wrapping, and the Market had declined 1/2C. What did Mr. Wilhof lose by the accident? — Ans. $66.28. EXAMPLES INVOLVING THE USE OP THE ONE-THIKTY-SECOND CENT — ^DECIMAL EQUIVALENT $.0003125=3^^ POINTS. Ex. 1. What is the value of 1 B/c, 512 lbs., at 8 l/32c per lb.? —Ans. $41.12. Note. — This Fraction is an exceptional one in the Trade ; that is, it is not used so extensively as the others in the preceding. In qrder to know the position of the Decimal Point, if the full Fraction is used, seven figures must be counted off from the right towards the left in the product. Ex. 2. I was offered by one Buyer for my 6 B/C, 12%c by another l/32c better. I sold to the latter. My cotton weighed 3,072 lbs. What was the total amount real- ized, and what did I gain by selling to the last Buyer? Ans.— Total $377,28; gain 96c. Ex. 3. Johnson & Smith bought 20,560 lbs. of cotton at 9 l/32c and sold it for 9i/4c. What was their gain? —Ans. $44,971/2- NoTE.^Eefer to Table XVII, which shows 1/32 of a Dollar to be .03135 Decimally, and for a Cent, 1/100 of that amount, which equals $.0003135. The value of the Fraction J converted to thirty-seconds, equals 8/32. From the 8/32 (J) subtract the 1/32. 8/33=$.0025000 1/33=$.0003135 7/33=3.0021875 Multiply the weight, 20,560 lbs., by $.0031875, which equals, $44.97^. Ex. 4. I sold 3 B/C, 526, 497 and 545 lbs., respectively, for 8 15/16C. I lost 1/32 in weights. What did I get for the cotton? —Ans. $135,76. 130 ARITHMETIC OP COTTON Ex. 5. A Buyer bought 50 B/C for 10 7/32 average, held it 2 months and sold for 10 23/32c. His expenses were : insurance 40c, weighing 10c and drayage 10c a bale. The cotton weighed 25,600 lbs. What was his gain or loss ? — Ans. Gain $98.00. Ex. 6. A Farmer sold 85 B/C for Sy^c a lb. to be de- livered in 5 days, during which time the Market declined 5/32c. The Buyer offered $40 to the Farmer to cancel the sale. The cotton weighed 18,550 lbs. What would the Buyer have saved or lost had the Farmer accepted the $40 ? —Ans. Saved $11.01 9/16. Ex. 7. Eldred Miller was offered IO.371/2 for 8 B/C by one Buyer and 10 12/32 by another. Which offered the best price and what would he have gained or lost by selling to the first Buyer? — ^Ans. Neither. Nothing. Ex. 8. Thompson & Brown shipped 100 B/C to New Orleans, of which the out-turn showed a loss equal to 1/32 in price. The cotton weighed 52,800 lbs. What was the money loss? — Ans. $16.50. Ex. 9. Edgar Clark shipped 60 B/C to Savannah, which lost 2 2/3 lbs. average to the bale, and 3/32 valuation in classification. He paid for 30,592 lbs. at 8 3/5c, and sold it delivered in Savannah at 9 9/32c. The freight rate was 30c per cwt., and commission $1.00 per bale. What was the gain or loss on the shipment? — Ans. Gain $13.25 1/5. Ex. 10. Two Buyers in discussing the average of a list of 100 bales, disagreed. One said it was worth on the Mar- ket 9%c, the other argued that it was worth Sy^ Points better, and he would give that Premium for it. What is the difference in value between the two Buyers? The cotton weighed 48,000 lbs. —Ans. $15.00. CHAPTER II. SECTION III. BASIC COTTON CALCULATIONS. Under this heading a starting point is assumed, from which the beginning for calculations is made, and the ab- breviations expressive of the terms^* will be frequently used. As the student advances in the subject of the cotton ques- tion, he will find it convenient to observe the Terms and Abreviations used by the Trade in solving cotton problems by rapid calculations. In figuring cotton on basis classification, it is necessary to know the Base and the Grades relative to it, also the Let- ters, Figures and Characters representing those Grades. Having learned in Chapter I the value of the Cent,, Half, Quarter and Eighth cents, etc., in connection with the yalue of the Point, in making cotton calculations, the following Problems to be solved are stated on the assumption that the student is conversant with those values, meaning and ap-- plication, and is now prepared to accept shorter methods for. getting definite and average results. For clearness, the Grades are again given with corresr ponding Numbers, Letters and Characters, to which the student's attention is called, with the request that he famil-; iarize himself with them, as they will frequently appear, in stating Problems. The Cotton Exchange now recognizes 2S Grades of cotton,, including the Tinges and Stains and Half and Quarter sub- divisions. It is immaterial the number of Grades to be considered, for the principle for calculating them is the same. iiSee "Terms," p. 88. 132 ARITHMETIC OF COTTON For practical purposes in making calculations covering a variety of Grades, the New York official list is quoted, less the Quarter Grades, with Characters, Numbers and Initials representing them, preceding and following the Grade name. TABLE XIX. Character and Grade Name. Initials Number a Fair ..._ F. b Strict Middling Fair ' S.M.F. c Middling Fair ....._ _ M.F. d Strict Good Middling S.G.M 1 Good Middling _ G.M. 2 Strict Middling. S.M. 3 MIDDLING (Basis) _ M. 4 Strict Low Middling _ S.L.M. 5 Low Middling _L.M. 6 Strict Good Ordinary S.G.O. 7 Good Ordinary __ _ G.O. 8 Strict Low Ordinary^^ S.L.O. 9 Low Ordinary^' L.O. d-t Strict Good Middling Tinged S.G.M.T. 1-t Good Middling Tinged (Middling value) G.M.T.. 2-t Strict Middling Tinged S.M.T. 3-t Middling Tinged M.T. 4-t Strict Low Middling Tinged S.L.M.T. 5-t Low Middling Tinged _._ L.M.T. 3-S Middling Stained ...„_ _ M.S. Members of the Trade do not all use the same symbols to indicate the Grades. Some use Letters, some Numbers, some Characters of their own devising for their special private use, but all are used for brevity in gradation work, correspondence, making calculations, etc. ISThese Grades are not in the New York official list, and Fully and Barely are left out. ARITHMETIC OP COTTON 133 All Grades better in quality than Middling receive a Pre- mium — ^better price — while those inferior in gradation are penalized at a Discount — less price. The Premiums are so much "on" the Middling price ; the Discounts so much "off" the Middling price.^* Good Middling Tinged (G.M.T.) is recognized of equal value with Middling. There being no definite difference to be taken off or added for Tinges and Stains by the Trade, beyond what may be arbitrarily applied, calculations involving the operation to find their values will be stated in the Problems showing such kinds of cotton. The Cotton Exchanges assess a variable Discount on all the Tinges and Stains except the Grade S.G.M.T., which is given a small Premium above Middling. Cotton quotations being often given in halves, quarters, eighths, sixteenths etc., are easily converted into Points by calculation, or by reverting to the Table of Points, or Table XVIII. TO FIND THE TOTAL VALUE OF COTTON WHEN DIFFERENT PRICES FOR DIFFERENT GRADES ARE GIVEN. Where the Price of each Grade is known, with its corres- ponding weight, it is an easy matter to ascertain its value — by multiplying the price by the weight. If several weights, the value of each will be calculated separately, and the sum of the separate values will make the total value. The Rule applying for the preceding Examples will be found applicable for the solution of the following Problems : Note. — To accelerate the work it is frequently easier to perform the multiplication by multiplying the weight by the price. leSee "Discount and Premiums," pp. 108 and 112 ; also Specific Grada- tion, p. 45. 134 ARITHMETIC OF COTTON PROBLEMS. Ex. 1. Find the value of 1 M. B/C, 520 lbs., at 10c. — Ans. $52.00. Ex. 2. In the sale of 2 B/C, one classed M., the other S. M., the basis price was 10c with 14' on for S. M. The M. weighed 500 lbs. and the S. M. 520 lbs. What was their value? —Ans. $103.30. Ex. 3. Jones sold 3 B/C ; 1 M., 548 lbs.; at 10c ; 1 S. L. M., 520 lbs., at 93^c; 1 L. M., 580 lbs., at 9c a lb. What was their value ? —Ans. $157.70. Ex. 4. What is the difference in value between 4 B/C, 2,640 lbs., at 8ii,c and 8 5/16c a lb.? —Ans. $1.65. Ex. 5. Find the value of 7 G. M. B/C, .3,620 lbs., at IOI/2C; 5 S. M., 2,600 lbs., at 1014c ; 4 M., 2,250 lbs., at 10c; 3 S. L. M., 1,650 lbs., at 93^c and 1 L. M., 560 lbs., at 9c. —Ans. $1,082.87 1-2. Ex. 6. In a controversy over the gradation of 2 B/C one Buyer said one was a S. M. and the other a G. M. The second Buyer classed them as 2 S. M. The cotton was sold to the first buyer who allowed a 14 on S. M. for G. M. What did the Seller gain by selling to the first Buyer? The weight of the S. M. was 560 lbs., the other 580 lbs. — Ans. $1.45. Note. — It makes no difference what the basis price in this Pi'oblem — the g-ain of J was on 1 bale only. Ex. 7. The differences expressed by the Cotton Ex- changes for relative Grades do not always harmonize with those demanded by the Trade. Will Eddins had 12 bales of L. M. cotton, which was quoted at %, off M. When he sold, the Buyer deducted I14 off as a Trade Discount. What was ARITHMETIC OF COTTON 135 the difference in value between the Trade and Exchange Dis- counts? The cotton weighed 6,480 lbs. — Ans. $32.40. Ex. 8. A Grower knowing the price of cotton to be 8i^c M/B, took 15 bales to Market, but on arrival found the price had declined 12 Points. The cotton weighed 7,860 lbs. What was his loss on the decline? —Ans. 9.43+ Ex. 9. Suppose the Market had gone up 20 points, what would have been the price per lb., and what would the Grow- er in Example 8 have gained? —Ans. 8.70c. Gain $15.72. Ex. 10. Find the value of 2 G. M. B/C, 1,160 lbs., at 9.871/2C; 3 S. M., 1,648 lbs., at $9.62i/2c; 5 M., 2,824 lbs., 93/8C and 2 L. M., 1,000 lbs., at 85/8C. —Ans. $624.17. Note. — The 87i and 624 equal | and f respectively. The Fractions then are |, f, f and f. These can easily be converted into Points. (See Tables XVII and XVIII) and annexed to the Cents to complete the Decimal, which can be used as a multiplier instead of the Mixed Fraction. Ex. 11. What can I get for 5 B/C, the weights being 522, 518, 547, 560 and 503 lbs., if the price is 7 2/5c? —Ans. $196.10. Note. — One-fifth of a Cent equals 20 Points (see Table XVI) ; 2/5 equals 40 Points. Decimally, then the price is 7.40c. Ex. 12. Find the value of 20 B/C at ll%c. Weight 9,900 lbs. —Ans. $1,163.25. Note. — ^Convert the | into Points. Ex. 13. In the sale of 80 B/C, 41,280 lbs., the basis price was raised by competition from 9.60 to 3/10 of a Cent» better. What was the sale price and what was the gain over the basis value? — Ans. Sale price 9.90c. Gain, $123.84. 136 ARITHMETIC OF COTTON Note. — The price 9.60, means 9 Cents and 60 Points. Expressed Deci- mally it is .0960 of a Dollar. Ten Points (see Table XVI)^ are expressed as .0010 of a Dollar. Thirty Points equals 3x10 Points equals $.0030, or 3/10 of a Cent. The 9.60 decimally is $.0960 The 3/10 is, decimally .0030 The price, then, is $.0990=9.90c. Ex. 14. A Cotton Merchant bought 100 B/C after nightfall by telephone ; the Market came in 15 Points up the following morning. What was his gain on each 500-lb. bale? — ^Ans. 75c. Ex. 15. If this lot of cotton averaged 520 lbs. to the bale, what was the Merchant's gain on the entire lot? — Ans. $78.00. Ex. 16. M. cotton being worth 7%c, what can I get for 1 G. M. T., 560 lbs., and 1 G. O., 540 lbs., with 250 off for G. 0.? —Ans. $70.37i/a statement : G. M. T. has M. value ; 7fc =.07625 Dollar 250 Points ofE = .0250 Dollar Difference =.05125 Dollar .05125 Dollar =54 Cents. 540 lbs.X5J=value G. 0.=27.67i 560 lbs. X7f =42.70 Total $70,374 CHAPTER HI. SECTION IV (Continued). TO FIND THE AVERAGE PRICE WHEN THE PRICE AND WEIGHTS OF THE BALES ARE DIFFERENT WITH BOTH WEIGHTS AND GRADES GIVEN. In calculating large lists of cotton, time is saved by get- ting the average . price, and multiplying it by the total weights to ascertain the total value. FIRST PROCESS. In getting the average under this Process, the weights of the different Grades, and the prices for those Grades must be known. The averages secured under it are absolutely correct, but owing to the amount of mathematical work involved, and the slowness of operation in computing extended lists of cotton, the Trade does not utilize it for every-day practical purposes. (Introduced for the purpose of showing Problems solved with accuracy, in comparison with other practical methods in daily use, whose results are close approximations to it.) Rule 2. — Arrange the bales, grades, weights and prices in columns; placing bales under bales, grades under grades, weights under weights, prices under prices. Find the value of the different grades separately, by multiplying the weight of each grade by its price, and placing the amount opposite its grade, which will form a column for the values of the different grades. Add these values, divide the sum by the total number of pounds; the quotient will be the average price. 138 ARITHMETIC OF COTTON Note. — When the M. price only is given, with the statement that so many sixteenths, eighths or quarters are added as Premiums for the Higher Grades and similar relative differences or Discounts off for the Lov^er ones, find the value of each Grade by adding the Premiums for the Higher Grades to the Jf. price and deducting the Discounts for the Lovyer ones. After ascertaining the Grade price,, proceed as stated in the Eule. When the totals of all the values show Dollars and Cents, reduce them to Cents by multiplying by 100, the number of Cents in a Dollar, and divide this Product, as stated, by the total number of pounds ; the answer will be the average price in Cents and fractions of a cent. Problems. Ex. 1. Let it be required to average the following list of cotton : 8 G. M., 7 S. M., 5 M., 3 S. L. M. and 2 L. M. Basis 10c; 14 "on" for S. M. and 1/2 "on" for G. M., with % "off" for S. L. M., and % "off" for L. M., with the weights shown in explanation. — Ans. 10.14+c. Explanation. — We must, from the Problem, get the price of each Grade. M. is the basis, and is 10c a, lb. From the statement, S. M. is i' on M., and G. M. i on that, or J on M. Then for the Lower Grades i and | off respectively, for S. L. M. and L. JI. From this quotation let us arrange the Problem according to the Eule, in tabular form. G. M. lOi, (i "on" makes 10 J) S. M. lOi, (i "on" makes lOJ) M. 10 (Basis) S. L. SL 9i, (J "off" leaves '9|) L. M. 9i, (|"off" leaves 9i) Continuing further : — Grades. Price Weights. Value. 8 G. M. lOJ X 4160 lbs. — $ 436.80 7 S. M. lOi X 3613 lbs. = 370.33 5 M. 10 X 3510 lbs. = 251.00 3 S. L. M. 9i X 1630 lbs. = 157.85 3 L. JL 9i X 1000 lbs. = 93.50 13903 $1308.48 1308.48 X100c=130848 Cents. 130848H-12902=10.14+Cents=average price. ARITHMETIC OF COTTON 139 Note. — The number of bales in this Problem are not reckoned — only the weights of them. Ex. 2. Average this list : 2 G. M. 1120 lbs. at 8c. 1 S. M. 560 lbs. at 734c. 2 M. 1000 lbs. at Ti/gc — Ans. 7.76+c. Ex. 3. What should I pay as an average price for the following list? 2 G. M. 980 at 9c. 3 M. 1610 at 8 1/2C. 4 S. L. M. 2180 at 734c. 2 L. M. 1050 at 7c. —Ans. 8.03+c. Ex. 4. As an all-round price, what should a Buyer pay for 15 B/C at 8c B/M ;.l-4 up (on) for S. M., and 1-2 up for G. M. ; 14 down (off) for S. L. M. and 100 down for L. M. Three G. M., 1610 ; four S. M., 2012 ; one M., 503 ; five S. L. M., 2490, and two L. M., 1015 lbs. respectively? — ^Ajns. 7.95+c. Note. — To the M. base, add the Premiums ; f romi it take the Dis- counts, as stated in Statement, Problem 1. "One hundred down" means 100 points or 1 Cent deducted from the M. price. Ex. 5. C is offered 10.30 for 1 S. M., 536 lbs., and 10.05 for 1 M., 520 lbs., or 10.15 as an average price. He sold for 10.15; did he lose or gain by accepting the average price and how much? —Ans. Lost 28 4/lOc. Ex. 6. Find the cost of 1 G. M. B/C, 496 lbs., at lOi^c, and 2 M. bales, 512 and 528 lbs., at 9.80. What will be the total value and what is the average price? —Ans. Total value $152.76. Average price 9.94+c. Ex. 7. Average 3 S. G. M., 1,640 lbs. ; 2 S. M., 1,080 lbs. ; 2 S. L. M., 992 lbs. ; 1 L. M., 576 lbs. ; 2 S. G. 0., 1,120 lbs. ; 140 ARITHMETIC OP COTTON B/M 5c, 5-8 on for S. G. M., 1-2 on for G. M., 1-4 on for S. M., 3-8 off for S. L. M., 125 off for L. M. and 200 off for S, G. 0. — Ans. 4.62+c. Ex. 8. Average the following list on a 9c basis: 1 M. F., 150 up, 520 lbs.; 2 S. G. M., 100 up, 1,040 lbs.; 3 S. M., 3-8 up, 1,560 lbs.; 8 M., 4,160 lbs.; 5 S. L. M., 3-8 down, 2,600 lbs. ; 1 L. M., 100 down, 520 lbs. ; 2 S. G. O., 200 down, 1,040 lbs. ; 10 S. M. T., 10 down, 5,200 lbs. ; 9 S. L. M. T., 75 down, 4,680 lbs. ; 7 L. M. T., 125 down, 3,640 lbs. ; 2 M. S., 50 down, 1,040 lbs. —Ans. 8.6OI/2C. Getting the average under this Process is of no material benefit to a Dealer, beyond the fact he can establish it ac- curately, as the value of the quantity of each Grade, and the total value of all is secured before the average can be found. The Dealer knows the total value before knowing the average. SECOND PROCESS — TO FIND THE AVERAGE PRICE WHEN THE NUMBER OF BALES AND CLASS OF EACH ARE GIVEN BUT NOT THE WEIGHTS. The following rule describes one of the short methods of finding the average price where the weights of the bales are unknown. The average thus found is not absolutely correct, but ap- proximates accuracy very closely. Rule 3. — Assume the whole number of hales as so many pounds; multiply the number of bales in the different classes by the Grade prices of the respective classes; add the pro- ducts and divide by the whole number of bales. The quo-, tient mil be the average price, very nearly. Let it be required to find the average price of the follow- ing 25 B/C. ARITHMETIC OF COTTON 141 Ex. 1. Six S. G. M., 10.75c; 5 S. M., IQi^c; 4 M., 10c; 6 S. L. M., 9 ll/16c; 4 L. M., dVsc. — Ans. lO.Oli/ac. Explanation. — Following the Rule we make the tabular Etatement, with the ntunher of bales representing pounds, to be multiplied by the price of each pound. S. G. M. 6X1075 = 64.50 G. M. S. M. 5X10.25 = 51.25 M. 4X10.00 = 40.00 S. L. M. 6X 9.687517= 58.1250 L. M. 4X 9.125 = 36.50 25 =350.375H-25=10.01i The approximate average made as detailed in the pre- ceding Problem is upon the hypothesis that if 1 lb. of S. G. M. cotton is worth 103^c, 6 lbs. would equal 6 times that value; 5 lbs. S. M. at 10i4c a lb., equal 5 times the value of 1 lb., etc. Reasoning by analogy, if 25 lbs. are worth two Dollars, fifty and three-eighths Cents ($2.50%, see Statement in Problem above), 1 lb. is worth 1/25 of that amount, which equals 10.011^ Cents. This average price is not exact, because of a difference in the weights of the bales of cotton. Were all the bales of the same weight, the average would prove absolutely cor- rect. While the weights of the bales are not shown in the Prob- lem, the numbers representing them, are indicative of that many pounds for that Grade, which, as seen, are variable, hence a cause for inaccuracy. This process of averaging is sufficiently near correctness to be of practical value in the cotton Trade, although as stated, it is used but little. Ex. 2. On a 10c basis, I bought 10 B/C, with the Differ- ences of 1/4 and 1/2 up for S. M. and G. M., and 5/16 and 1 Cent down for S. L. M. and L. M. I classed it out as. 3 G. "See Table XVII— ll/16=.68r5, i=.125. MB— 6 142 ARITHMETIC OP COTTON M., 1 S. M., 5 M., and 1 S. L. M. The Buyer for whom I bought showed his out-turn to be 2 G. M., 2 S. M., 3 M., 1 S. L. M. and 2 L. M. What amount of Reclamation did he claim from me? Total weight 5,000 lbs. — Ans. $11.25. Note. — Tabulate each classification as shown in Explanation for Ex. 1, subtracting the lesser from the greater amount. Ex. 3. Thompson & Hendrix shipped 50 B/C from Jack- son, Miss., to Jones & Brown, New Orleans, which was sold on a lie basis f. o. b. Jackson, with the weights and Grades guaranteed by the Shippers, who classed it as 2 S. G. M., 5 G. M., 7 S. M., 10 M., 15 S. L. M., 6 L. M., 3 S. G. 0. and 2 G. M. T. The Differences to apply were 5/16, 1/2 and % on for S. M., G. M., and S. G. M. respectively, with 5/16, % and 11/2 off for S. L. M., L. M., S. G. 0. ; G. M. T., M. value. Thompson & Hendrix drew for the full value of their cotton on the B/L and Draft, which the local bank paid on Invoice weights, 26,500 lbs., at Jackson. The returns showed 26,- 180 lbs. weight at New Orleans, and the classification of Jones & Brown to be 1 S. G. M., 5 G. M., 5 S. M., 11 M., 16 S. L. M., 7 L. M., 4 S. G. 0. and 1 G. M. T. What will be. re- claimed by Jones & Brown for over-classification and short weight? —Ans. $55.66+ The disagreement in classification shown in examples 2 and 3 is of frequent occurrence in the Trade, and empha- sizes the necessity for a uniform Standard and familiarity with it by all parties concerned. Note. — It may be stated that over- or under-classification is resorted to by both Buyer and Seller for pecuniary purposes sometimes, but it is easily detected and the aggressor usually gets punished in the end. Such practices are exceptions, and not indorsed by the Trade. Ex. 4. A Street Buyer bought from wagons during the day 13 B/C at 9.80c; 3 at loa/sc; 6 at 9.42i/2c; 2 at 8.60c. What was the average price paid? — Ans. 9.68c nearly. ARITHMETIC OF COTTON 143 Ex. 5. A Grower was offered 8.85 for his 35 B/C at Ma- con, Ga., but thinking the offer too small, shipped the cot- ton to a Commission Merchant at New Orleans. The cot- ton was held 4 months and sold for 10c a lb. If Freight was 55c a cwt., charges $1.00 a bale, the first month, and 30c a bale each subsequent month, not reckoning any interest on the money, what was gained or lost by consigning this cot- ton? The cotton weighed 18,720 lbs. — Ans. Gained $45.82. Ex. 6. A Cotton Buyer bought from farmers' wagons 100 B/C which cost him an average of 22 Points on Mid- dling ; but when he sold it he found his second classification to run 25 on Middling. What was his gain by re-classing? The cotton weighed 51,860 lbs. —Ans. $15.55 4/5. Note. — Cotton Buyers in buying cotton in small quantities from Growers, occasionally find their own classification at time of sale to be at variance with that at time of purchase. This can be accounted for by reason of the fact that at time of purchase, smaller samples were drawn, or possibly they were viewed in a different light. Ex. 7. A list of 140 B/C was offered for sale. Three Buyers, A, B and C, bid on it. The Market was 12i/4c basis. A had 12 5/16, with l^ and % up ; 5/16, % and 150 down; B had 1214 with 14 and 1/2 up; 5/16, 100 and 150 down, with a discretion of 1/16 if needed, and C had 121/4 with the Market Differences which were i^ and % up; 5/16, % and 125 down, but being an Exporter, figured Liv- erpool Class on the purchase, which averaged % on Ameri- can Class, except L. M. and S. G. 0. The Grades were 30 G. M., 40 S. M., 45 M., 12 S. L. M., 10 L. M., 3 S. G. 0. What was the average price of each and to whom should the cotton be sold? —Ans. Sell to C. A's average 12.34c. B's average 12.36c. C's average 12.40c. 144 ARITHMETIC OF COTTON Statement: B had a quarter (i) basis with a "discretion" of 1/16, which he used ; A had a 5/16 basis ; C had a J basis, but in order to get the cotton, bid, and figured Liverpool Class on all Grades except L. M. and S. G. O. For the grades shown there were for A. B. C G. M. 13 11/16 12 13/16 12 3/4 S. M. 13 9/16 12 9/16 13 5/8 M. 13 5/16 12 5/16 12 3/8 !. L. M. 12 12 13 1/16 L. M. 11 7/16 11 5/16 11 3/8 S. G. 0. 10 13/16 10 13/16 11 By reverting to Table 2, the Decimal Fraction equivalent to the Common Fraction should be annexed to the Cent price, and the Rule followed in making the necessary multiplications. The prices stated for B and C are their final bids, after B added his discretion of 1/16 and C had figured his Liverpool Class. A's prices converted to Decimals, for calculation with the number of bales, follow. Let the Student calculate the others from this one. No. Bales. Price. Value 30X12.6875=$ 3.806250 40X12.5625= 5.025000 45X12.3135= 5.540625 13X13. = 1.440000 10X11.4375= 1.143750 3X10.8135= .324375 140 $17.280000 $17.38-^140=$.1234+=13.34c=A's average price. Note. — The Statement that B "had a quarter basis" is a Trade ex- pression, and is used to indicate the M. price, exclusive of the 13c. Instead of saying "13J basis," or "7f basis," or "9i basis," it is common to hear Dealers say "I had a quarter today," "I had 5-8 last night" or "The best I can get is a half ;" the inference being pre- sumed that all know the Cent price. Sometimes to secure a list of good cotton, or to get what is wanted, large Buyers will allow a small Premium to be added to the Market price or to the "limit" their representatives have, which Premium is called a "Discretion." Ex. 8. I bought a list of 10 bales of hard cotton in No- vember. There were 3 S. G. 0., 2 M. T., 1 M. spotted, 2. G. 0., 2 M. S. Basis Sl/gc. The Discounts were S. G. O., 150 ; ARITHMETIC OF COTTON 145 M. T., 30 ; M., Spotted, 35 ; G. 0., 250 ; M. S., 90. What waa the average price.' — Ans. 7.27 l-2c. Ex. 9. If the weights of the bales taken in order named are 1620, 1130, 1180, 1090 and 522 lbs., what is the value of the cotton in Ex. 8? —Ans. $403.18. Ex. 10. Under this Process, average Ex. 3 given under Process I. —Ans. 8.04+c Note. — It will be seen that the average imder this Process gives about 1 Point more than shovyn under Process I, vyhich is correct. THIRD PROCESS. — TO FIND THE AVERAGE PRICE WITH NUMBER AND. CLASS, BUT NOT WEIGHTS OF EACH BALE GIVEN. This is known as the sixteenth, or 6% Point Process. To make cotton calculations involving its use, quotations must be in sixteenths or multiples of sixteenths. . Averages are ascertained under this Process as in the preceding one, without the use of weights, and the result is a close approximation. For practical purposes, among all Buyers, this Process is used almost universally, as it is brief, easily learned, and very convenient for those buying and selling in lots, after making the classification. After making the average, the weight of the entire lot is multiplied by the average price to obtain the total amount. Consignees in giving account-sales of cotton received by them as purchasers or Factors, do not always use this meth- od in showing the result of the sale, but instead, multiply the total weight of each Grade by the price of that Grade, and from the sum of the totals, deduct the amount of the Charges, remitting the balance. The result of this Process is practically the same as that obtained under Process II. 146 ARITHMETIC OF COTTON In performing the operation under this Process, it is more convenient to understand and represent the different Grades by characters, letters, numbers or initials. (See page 118.) To obtain the average under the 6l^ Point method, let us be governed by the following: Rule 4. — (1). Designate the Grades by their character representations, as a, b, c; 1, 2, 3, etc.; opposite each Grade place the number of bales of that Grade; multiply these numbers by the number of sixteenths the class shows to be above or below Middling value; add the products of the sixteenths above and below Middling, separately; subtract the lesser from the greater amount, multiply the remainder by &V4,, divide the product by the number of bales; the quotient will be the number of Points to be added to, or subtracted from, the Middling price. (2.) If the excess is above, add the Points to; if below, subtract from the Middling price, the result will be the av- erage price, nearly. Ex. 1. Find the average of 1 M., 2 S. L. M., 5 L. M. ; M. B. 10c, 14 off for S. L. M., 34 off for L. M. — Ans. 9.54 l/6c. Note. — It should be remembered in calculating' averages under this Rule, the Middling Grade is passed — that is, it does not enter into the computation of the Problem further than being added to the number of bales to be averaged. The arrangement of the form *and the Rule should be memorized, after which, the familiarity of the operation will become quite easy. Arrange the work in this vyay : Grades. (M) 3 (S. L. M.) 4 (L. M.) 5 Bales. 1 2 3 Price 10 91 9i Sixteenths. (Bales.) 4X2= 12X3= Sixteenths, 8 36 Added = 6 =16 =44 ARITHMETIC OF COTTON 147 Explanation : The 3, 4, and 5 represent the Grades ; i off^4/i6, represented as 4 ; i oif equal 12/16, shown as 13. There are 2 bales of S. L. M. The 2 (bales) is multiplied by the 4 (sixteenths) =8 six- teenths; 3 (bales) multiplied by 13 (sixteenths) ^36 sixteenths. Add- ing the sixteenths^44 sixteenths. 6^ Points =1/16. Multiplying the 44 by 6i Points, gets the total number of Points in 44 sixteenths, which, divided by the number of bales (6) gives the number of Points to be taken from the Middling price, the remainder of which equals the average price. It will be noticed the S. L. M. price is 9| and the L. M. 9i Cents. The M. price is 10c, J off leaves 91 ; the J is the amount "off;" it is the amount used — the 4/16 reckoned. The numerator of the Fraction 4, is the figure used. From the M. price down to L. M. is i ofE, i=12/16, of which the 12 only is used. nation : (Sixteenths) (Points) 44 X 6 1/4 =275 Points (Points) (Bales) 375 H- 6 = 45 5/6 Points M. Price = 10c =1000 Points The Grades S. L. M. and L. M. are under M., hence the 45 5/6 Points must be subtracted from the 1000 Points 954 1/6 Points= i;; 5/6 Points 954 1/6 Points 9.54 l/6c Answer Now, work the Problem as it would be solved by a Dealer who knows, to begin with, that the numerator of the Fractions 1/4 and 3/4, when reduced to sixteenths, are 4 and 12, and there are 2 bales of the 4- and 3 of the 12-sixteenths. Note the few figures to get the average. 2X 4=8 3X12=36-1-8= 44 44 X 6 1/4 =275-h6=45 5/6 10c— 45 5/6 =9.54 1/6. 148 ARITHMETIC OP COTTON Ex. 2. Work the same Problem by Rule 3. Explanation : 1 bale 10c = 10c 2 bales 9 3/4c=9.75c 3 bales 9 l/4c=9.25c lOcX 1=10.00 9.750X3=19.50 9.350X3=2775 6 57.35 57.35-4-6= 9.54 l/6c Note. — In the following Problems the names of the Gradesis are rep- resented by letters or fignres, unless specifioally stated otherwise. Ex. 3. On a basis of 7 l/2c, what will be the average of 2 G. M., 1 S. M., 2 M., 1^ and 1/2 up for Strict and Good Middling? — Ans. 7 3/4c. Explanation : Grades Bales Sixteenths Sixteenthsia 1 3 X8= 16 2 1 X4= 4 3 2 (Pass) Sum =20 sixteenths 20X6 1/4=125 Points. 125-=-5 (No. bales) =25 Points. The Gardes other than M. are ahove, and must be added to the M. price. M. price is $.0750 Plus, Points .0035 Equaling (7 3/4)= .0775, or 7.7oo Ex. 4. Average the following list : Two G. M., 5 S. M., 5 M., 2 S. L. M. and 1 L. M. Basis 8I/2C. Premiums % and 14, with Discounts y^ and %. —Ans. 8.57 l/2c. Note. — ^There are two Grades above and two below M., hence in the Problem there must be additions and subtractions in the solution, as follows : isSee list Grade names, p. 133. i^See Table XII, p. 93, for numerators of the sixteenth fractions. ARITHMETIC OF COTTON 149 Explanation : Class Bales Sixteenths Sixteenth (Grades) 1 2X8= 16 2 5X6=' 30 3 5 Pass 4 2X8= 46 up 16 5 1 X 12= 12 28 down 46 ups — 28 downs ^18 ups. 18X6 1/4=112 1/2 Points. 112 1/2h-15=7 1/3 Points to be added to the M. price. M. price $.0850 Plus, Points .0007 1/2 Average Price $.0857 1/2=8.57 l/2c. Ex. 5. What should I pay for a list of cotton as an av- erage price, in which there are 1 G. M., 8 S. M., 10 M., 22 S. L. M., 25 L. M., 10 S. G. 0., 5 S. L. M. T. and 19 G. O., on an 8I/2 basis, with 5/16 and 9/16 up; 6/16, 100, 150, 8/16 and 300 off respectively, in the order named? — ^Ans. 7.45+c. statement : Class Bales. Sixteenths. Sixteenths. 1 1X9= & 3 8 X 5= 40 49 up 3 10 (Pass) 4 22 X 6=132 5 25 X 16=400 6 10 X 34=340 7 19 X48=912 4-t 5 X 8= 40 100 Total 1734 down Note.— The Grades L. H. 100, S. G. O. 150, and G. O. 300 Points ofE, are represented as 16, 24 and 48, respectively. As 100=16/16, it is 150 ARITHMETIC OF COTTON given as 16; 16/16=100, 8/16=50, thus 16/16+8/16=24/16=150, given as 34 ; if 150=34/16, 300 will = tvv^ice 24/16=48/16, given as 48. Again, 100=16/16, 300=3X16/16=48/16. Ex. 6. What would be the price of G. M. cotton at 17/32 "on," if the M. base is 10 3/8? — Ans. 10.90 5/8c. Note. — ^Eefer to Table 2; convert the 3/8 and 17/33 to Decimals for 32ncls, and add the Decimals. Eemember it takes four figures (Deci- mals) to make Points. The M. price, 10 3/8=10c and 37 1/2 Points, = 10.37 1/3 or 10.375. 17/33c=53 1/8 Points = .53135c Decimally, then to 37 1/3 Points add 53 1/8, Points = 90 5/8 Points = 10.90 5/8c. Cotton Buyers often speak of G. M. as "goods," S. M. as "stricts," S. L. M. as "strict lows," L. M. as "lows," or G. M. as "ones," S. M. as "twos," M. as "threes," S. L. M. as "fours," L. M. as "fives," S. G. 0. as "sixes," G. 0. as "sev- ens," S. L. 0. as "eights" and L. 0. as "nines." These expressions are not universal, even in the State of Texas, but prevail over the State to a large extent. Trade formalities are more or less localized, and what might be termed a "three" for M. in one locality, might be expressed, as "one" or some other number for this Grade elsewhere. The Grades from S. G. M. to G. 0. practically cover the entire list, and from G. M. to S. G. 0. probably takes in 75% of the marketable cotton of the South, and these Grades find expression in most cotton calculations. Ex. 7. A gentleman sold three 2's, four 4's and five 6's at 8 7/8 M. B.; the diflferences being 5/16 up and 5/16 and 1 1/4 down. What is the average price ? Ans. 8.32+c. Ex. 8. Solve Ex. 7 by Rule II, the weights of S. M. be- ing 1632, S. L. M. 2208, and the S. G. 0. 3120 lbs. — Ans. 8.29 nearly. Ex. 9. Solve it by Rule III. — Ahs. 8.32+c. ARITHMETIC OF COTTON 151 Ex. 10. Find the average of 10 "Goods," 5 "Stricts," 5 "Strict Lows," four 5-t's and one 3-s. Premiums 1/8 and 1/4 for "Stricts" and "Goods." Discounts 3/16 for "Strict Lows," 93 3/4 for 5-t's and 56 1/4 for M. S. B/M 7c. — Ans. 6.9II/2C. statement and solution : 1 10 X 4 =40 2 5 X 2 =10 50 3 (Pass) 4 5 X 3=15 5-t 4 X 15=60 3-s 1 X 9= 9 25 bales 84 down 84—50=34; 34X6 1/4= =212.5 Points. 212.5-h25=8.5 Pomts= 8 1/2. M. price, 7c —$.0700 Less 8 1/2 Points = .0008 1/3 DifEerence, average, is $.0691 1/3=6.91 l/3c Ex. 11. A number of Farmers having 200 B/C stored in a cotton yard, thinking the Market satisfactory, offered the lot for sale to the highest Bidder, who bought it at 8c M/B. The Premiums were 5/16, 1/2 and 3/4 up ; the Dis- counts for the Lower Grades were 5/16 and 3/4. In this lot were 5 "St. Goods," 55 "Goods," 102 "Stricts," 30 M's and 8 "Strict Lows." What was the average price received? —Ans. 8.30-fc. statement : M/B 8c. d 5 X12=? 1 55 X 8= 3 102 X 5 —up 3 30 (Pass) 4 8 X 5 ?— down 152 ARITHMETIC OF COTTON Ex. 12. How Many Points did this cotton run on Mid- dling? — Ans. 30+. Ex. 13. If the open Market was 7 7/8c, what was the gain to the Farmers by selling in bulk for 8c M/B, and the cotton weighed 102,000 lbs. ? —Ans. $127.50. Ex. 14. A number of Farmers sold for themselves 4,000 B/C, in Atlanta, Ga., at a Premium of 5/16 above the Mar- ket. For S. M., G. M. and S. G. M., the Premium^ were 3/8, 9/16 and 100 ; for S. L. M., L. M. and S. G. 0., the Dis- counts were 5/16, 7/8 and 150 respectively. M. price was 10 l/4c. The cotton weighed 1,960,000 lbs. There were 50 S. G. M., 870 G. M., 1,520 S. M., 1,260 M., 205 S. L. M., 70 L. M., and 25 S. G. 0. What was the average price, the gain on each bale, and what the whole gain to the Farmers from this co-operative sale? — Ans. Average 10.80c nearly. Gain on each bale, $1.53 1/8. Gain to Farmers, $6,125.00. statement : M/B 10 9/16 Cts. d 50 X16= ? 1 870 X 9= 2 1520 X 6= —up 3 1260 (Pass) 4 205 X 5= 5 70 X14 ? 6 25 X 24= — down NoTB. — The market price is 10.25 ; the gain in class is 33.66-)- Points, which, added to 10.25, equals 10.4866-|- Cts., the average price on 10 1/4 basis. The market being 10 1/4, and a Premium of 5/16 (31 1/4 Points) offered to secure the list, equals 10.25-|-31 1/4= 10.56 1/4, or 10 9/16 as the hasis for this sale. Now, 10.56 1/4 being the basis, and the gain in class being 23.66-|- Points, added to the basis, eqvials 10.799+ or 10.80 (nearly), as the average price. It is not usual to secure such Premiums as this even on a large list of cotton, but as the list shows to be largely high ARITHMETIC OF COTTON 153 grade, with a small percentage of "hard" cotton, exceptional values were obtained. Eemaeks. — For practice in securing averages under the 6 1/4 Point method, it is suggested that the Student go over the Problems under Rules II and III, solving them by Rule IV. It should be noted that the results obtained under Rule III are the same as those secured under Rule IV; which, as stated, are close ap- proximations, and are practically operative for business purposes. FOURTH PROCESS — PROBLEMS SOLVED AS THE 61^ POINT METHOD WITH THE 1/16 CENT ELIMINATED. Cotton is sometimes quoted to the Trade as so many Points on or off Middling, but not in relative proportion of 1/16, 1/8, or 1/4 up or down for the Higher or Lower Grades. When the "ups" or "downs" do not conform to the dif- ferences of 1/2, 1/4 or some multiple of them, the 6 1/4 Point method will not apply in determining averages with- out involving in the computation the use of Fractions, which would render the calculation cumbersome and somewhat complex. Cotton delivered on New York or New Orleans Cotton Exchange Contracts seldom coincides with the 1/16 or 1/8 Differences as quoted generally to the Trade, but the aver- ages can be obtained by making use of the Point differences, just as indicated for the relative Grades, and on the same principle as that utilized in the 6 1/4 Point method. PROBLEMS. Ex. 1. A delivered 100 B/C at the warehouse in New York on his July Contract on the 20th of that month. There were 5 G. M., 20 S. M., 38 M., 10 S. L. M., 12 L. M. 5 S. G. 0., 1 G. M. T., 8 S. L. M. T. and 1 M. S. The fixed differences 15 4 ARITHMETIC OF COTTON at the time were, respectively, 46 and 24 on ; 35, 80, 140, 0, 80 and 90. off. M/B, 10.40. What was the average price of his delivery? Ans. 10.197 Cts. Explanation : Grade Names. No, . Bales. Points Up. G. M. 5 X46 =230 S. M. 20 X24 =480 M. 38 (Pass) Points Down. Total Pts. Up. =710 S. L. M. 10 X 35= 350 L. M. 12 X 80= 960 S. G. 0. 5 X140= 700 G. M. T. 1 (Pass) S. L. M. T. 8 X 80= 640 M. S. 1 X 90= 90 100 Total Points down 2740 Less "ups" 710 Total net Points down 2030 2030 PointsH-100 (bales) =20.3 Points. Basis, 10.40, less 20.3=10.197 Cts. average. Pkoof. — This can be verified by the following tabular statement as exemplified under Second Process, by adding the Premiums to, and deducting the Discounts from, the M. price, and executing the work as indicated. Grade. Price. No. Bales. Totals. 1 10.86 X 5= 54.30 2 10.64 X 20= 212.80 3 10.40 X 38= 395.20 4 10.05 X 10= 100.50 5 9.60 X 12= 115.20 6 9.00 X 5= 45.00 1-t 10.40 X 1= 10.40 4-t 9.60 X 8= 76.80 3-s 9.50 100 X 1= 9.50 1019.70c I019.70-Hl00=10.197c average. ARITHMETIC OF COTTON 155 Note. — It shotild be remembered that the number of bales represent that number of pounds of each Grade, and if 1 pound is worth 10.86c, 5 pounds are worth 5 times as much, or 54.3c. The same reasoning applies for any number of pounds. The formula for getting the average is similar to finding it under process Three. The differences are stated in Points, the excess being divided by the whole number of bales, which is added to, or taken from the M. Price as stated. Rule. — Arrange the hales in consecutive order from the highest to the lowest Grade. Multiply each Grade by the number of Points it shows to be above or below Middling. Add the Points above and below Middling separately, sub- tracting the lesser from the greater amount. Divide the remainder by the whole number of bales; the quotient will he the number of Points to be added to, or taken from, the basis price. The result will be the average. Ex. 2. On a purchase of two lists of cotton, I secur- ed in the first lot, 3 S. G. M., 20 G. M. and 2 S. M. ; in the second lot 22 L. M., 1 G. 0., 1 L. M. T. and 1 M. S. I sold it for 11.10 basis, with 72, 47 and 26 Points on; and 90, 215, 190 and 85 off, respectively, for the Premiums and Discounts. What was the average price obtained? — Ans. 10.84+c. Ex. 3. In August I sold 100 bales of New York Decem- bers at 10.36. I delivered this cotton on the 10th day of December. I had 12 S. G. M., 23 G. M., 41 S. M., 20 M. and 4 S. L. M. At the time of sale the differences were, in the order named, 24, 46 and 70 Points on, with 35 off. The Revision Committee in November made the differ- ences 32, 50 and 80 on, with 37 off. What was my gain on delivering by reason of the action of this Committee, and what was the average^" price? —Ans. Gain $26.60. Average 10.687+c soNo insurance, warehouse charges nor any expense reckoned in this problem. 156 ARITHMETIC OF COTTON Some members of the Trade, in putting out their Differ- ence Sheets, say their Discounts for off colors are so many Points "off white," meaning that the Discounts must be taken from the Grades of white cotton of similar name, that is, if, Tinges are 25 Points "off white," then S. L. M. T. would be discounted 25 Points off of S. L. M. and not 25 Points off M., to get which the Discount off white would be added to the Discount off M. for that Grade. Let it be stated that S. L. M. is 371/2 Points off M., and Tinges are 25 Points "off white," then adding the two Discounts equal the total Discount to be taken from M., or 621/2 Points off M. gives the value of S. L. M. T. The following Problem will show clearly the meaning of the Discounts "off" and "off white," in a comparative way. Ex. 4. A Dealer bought 25 B/C at 10c basis M., grad- ing as follows : 3 M., 2 S. L. M., 2 L. M., 5 S. L. M. T., 3 L. M. T., 4 S. L. M Blues, 6 M. S. Discounts 35 and 90 Points off for S. L. M. and L. M., respectively. Tinges 25, Stains 35 and Blues 50 off white. What was the average price? — Ans. 9.42c. (Off White.) Explanation : Grade. Bales. Points. Points. M. 3 S. L. M. 3 X 35= 70 L. M, 2 X 90= 180 S. L. M. T. 5 X 60= 300 L. M. T. 3 X115= 345 S. L. M. Blue 4 X 85= 340 M. S. 6 X 35= 210 25 1445 1445-=-25= 58. lOcts— 58 Points = -Ans. 9.42ets. Explanation : ARITHMETIC OF COTTON 157 Grade Bales Points Points M. 3 S. L. M. ax 35= 70 L. M. 3 X 90= 180 S. L. M. T. 5 X 25= 185 L. M. T. 3 X 35= 75 St. L. M. Blue 4 X 50= 300 M. S. 6 X 35= 210 35 860 860-h25= 34 lOcts — 34 Points= — ^Ans. 9.66cts. It win be noted that calculating the same list of cotton as a certain number of Points "off" and "off lyhite," make a difference of 24 Points, or $1.20 on each bale of 500 pounds weight. CHAPTER IV. SECTION V— FREIGHTS. In all cotton transactions connected with transporta- tion, the subject of Freight Rates enters as a factor, of which cognizance must be taken in calculating prices for payment on cotton. Domestic Freights Rates may appropriately be placed under two heads. INTRA-STATE OR LOCAL RATES. INTER-STATE OR THROUGH RATES. Intka-State Rates are those applying within the boundaries of the State, which, usually being governed by a State Railway Commission establishing them, are said to be permanent, that is, they remain as established by the Commission, until changed by it. Intek-State Rates are those applying between one State and another. Freight originating in one State and transmitted to another have rates established covering the shipments to destination, and are termed Domestic Through Rates. Such Rates are established by the Inter- state Commerce Commission and come under its jurisdic- tion, yet while exercising its authority the Commission does not deprive the railroads under the law from making their own Interstate Rates, which they generally do, but are subject to revision and control by the Commission". 2iEailway companies having lines extending into and through sev- eral States, establish their own Eates, but are subject to revision by the Interstate Commerce Commission, as stated. ARITHMETIC OP COTTON 159 OCEAN FREIGHT KATES. Maritime Freight Rates are those instituted by Mari- time Transportation Companies covering the charges for transmitting Freights across the ocean to Foreign Ports. They are governed in some instances by associate or corporate agreement and are never constant in applica- tion, fluctuating often during the season. Competition occasionally enters as a factor affecting the Rate to be applied, and has a material effect in determin- ing the schedules of charges, more especially when con- tentions arise between competing lines for tonnage. Active bidding for Freights often results in reducing the charges, at which time Exporters have an opportunity for securing advantages for future shipments not other- wise obtained. Those periods of the year when Freight Rates are at their lowest points are seized upon by Exporters as oppor- tune times for booking their contemplated shipments for certain designated future months when cotton will be moving freely. Rates are influenced as stated, also to some degree, by the relative supply of freight room and quantity of cotton to be exported. A proposed export shipment of 10,000 bales of cotton would not secure or merit the same rate as one of 75,000 to 100,000 bales. Steamship Rates quoted in their circulars or through newspapers for the solicitation of business, are not those agreed upon by individual agreement, neither are private terms reported regularly to the public. Rates applying between the Southern Ports and the Northern and Eastern cities are constant year in and year out.^^ 22For schedule o£ Rates from Southern Ports to Foreign Markets, see Appendix. 160 ARITHMETIC OF COTTON Freights being essential in price making to the cotton Shipper, the following Problems are introduced for fex- planation : PROBLEMS. Ex. 1. Engle & Hart, Galveston, Texas sold 500 B/C to a Fall River, Mass., Mill, at 12.80 for even-running Mid- dling delivered, 90-days shipment. Assuming the order is filled in Dallas, Texas, what price can be paid for it there if Freight to Galveston is 51c and ocean Rate to Fall River is 35c per hundred lbs., with a Profit of 50c a bale calculated in the selling price? — Ans, 11.84c. Explanation : Delivered Price 13.80 Railway Hate ^51 Points Ocean Rate =35 Points Profit23 =10 Points Total expense .96 11.84 Ex. 2. Williams & Orms at New Orleans paid 9.85 "all round" for a list of 200 B/G at Meridian Miss. As- suming that they figured a profit of 40c a bale, the local railway haul 32, and ocean Rate of 36 to New Bedford, Mass., with Wharfage at 2 Points, what was the deliver- ed selling price? —Ans. 10.63c. Explanation : Paid in Meridian Profit 40c Railway Rate Ocean Rate Wharfage 9.85c = 8 Points =32 Points =36 Points = 2 Points 78 Points .78 10.63c 23Fifty cents per bale equals 10c per hundred pounds, equals 10 Points per pound. ARITHMETIC OF COTTON 161 Ex. 3. White & Sansom at Dallas, Texas, sold 300 bales of 1 1-8 even-running Strict Middling cotton to a •Providence, R. I. Mill in June for September and October delivery at 50 Points on October which was quoted at 11.60, with New York Cotton Exchange Differences to apply on delivery, which for S. M. was 24 Points on. What could this firm pay for this cotton in Terrell, Green- ville and Cooper, Texas, if charges were, Freight to Gal- veston 51, Wharfage 2, Ocean Freight 35, Insurance 8, Profit and Office Expenses 10 Points? — Ans. 11.28c. Explanation : New York October Futures 11.60 Points on October 50 Premium for S. M. ' 34 Total Points to be added .74 Delivered price 13.34 Freight, E. E. 51 Freight, Ocean 35 Wharfage 3 Insurance 8 Profit and Expense 10 Total ofEset 1.06 Could pay 11.28 Were competition not too close, this firm would offer for S. M. cotton at the places mentioned, 11.25c. The usual practice is to buy it M/B and from the large quantity of mixed Grades bought, the specific ones are selected and separated at concentration points, from which places they will be forwarded to the Mills. Ex. 4. Johnson & Wells at Oklahoma City, Oklahoma, sold 500 B/C for Liverpool at 30 Points on August-Sep- tember, which was quoted at 7.20d. What could be paid for this cotton at "common point" territory stations in that State if the rail haul to New Orleans is 52, and 162 ARITHMETIC OF COTTON Ocean transportation 57 Points, Tare 6 per cent, Insur- ance 1 per cent, with further charges of 14 P^r cent Brokerage, i/^ per cent Exchange, I/2 per cent Interest, 1 per cent Agents' Commission, less weight of Franchise^* and Patches," 2 per cent. — Ans. 12.80c. Explanation : Aug.-Sep. Liverpool Points on future months Pence 7.30 .30 Invoice C. I. P. & 6% In American money, 7.50d Less 6% Tare Price C. I. P. Less inland and ocean Freight Price C. & I. Less Insurance at 1% (13.01 + 10%) 7.50 Net price can pay f. o. b. in Oklahoma 12.80c. 2iSee Franchise, p. 353. 25Patches 5 lbs. per bale=l%. = 15.00c = .90 =14.10 = 1.09 =13.01 = .13 13.88 Charges : Brokerage 1/4% Exchange 1/3% Interest 1/3% Com. 1 % Total 2 1/4% 13.01 less 3 1/4% =.3935 Cost for bagging =.0500 Total .3435 Less wt. of Franchise, 3% of 13.01 =.3603 Net charges =.0823 Net landing price 13.8800 Less net charges .0833 12.7977 ARITHMETIC OP COTTON 163 Not all Merchants calculate in such great detail the method of getting a base for payment of cotton in their respective territory. In this calculation it will be noted no profit was estimat- ed, the presumption being that the Merchant expected to make it by buying for as much less than 12.80 as competi- tion would allow, and also from the patches put on the bales at the compress, a further gain was contemplated. After a Contract sale is effected and the price calculated for local payment, further gains accrue if the Market be a declining one, as the policy with the talent is to "fol- low the Market." Profits may be realized from the result of the appli- cation of the 6% Tare, as the following assumed transac- tion will show: Ex. 5. A firm in Atlanta, Ga., is offered 6 1-2 pence for cotton delivered in Manchester, England. To get at the price it can pay the farmer, the firm deducts the fol- lowing items that must be taken into account: The 6 1-2 pence =13.00c Tare, 6% =78 Points Inland Freight =34 Ocean Freight =56 Insurance =10 Expense — _. — 12 Profit =10 Total _.___= 2.00 Price to be paid to the farmer... =11.00 The statement shows 10 Points — 50c a bale — was figured as a profit in making the calculation to be paid the farmer. The 6% Tare equals 78 Points. The, usual weight for bagging and ties is 22 lbs., equivalent to 4.4% on a stand- ard weight bale of 500 lbs.; 4.4% of 13c equals 57 Points; the difference is 21 Points the Buyer gets as an additional profit to the 50c already calculated, less some deductions. 164 ARITHMETIC OF COTTON A standard bale is 500 lbs., 6% of which is 30 lbs. The export Buyer deducts 30 lbs. from the farmer's bale, be- cause Foreign Trade exacts it, to cover the weight of the wrapping, and as shown, gets too much of the farmer's cot- ton in figuring the net weight of his bale. In order that the Exporter may not lose, he puts on 8 lbs. of Tare in the form of patches,^^ for which he pays, say, 32c, and the Freight and Expense on it at $1.12 per hundred pounds is 9c, making the cost for patches 41c, which he sells at $1.17 (9 pounds at 13c) leaving a profit of 76c; in this transaction, he has the 10-Point profit, 50c a bale as shown in the outset, and 76c on the patches besides, which he holds if competition does not force him to relinquish a part or all of it, which it often does. Ex. 6. An Exporter in Waco, Texas, found the total charges for delivering cotton in Bremen to be 13.6% in- cluding his profit of 40c a bale. What would be the price he could pay at Texas interior points, gross weight, for the farmers' cotton, if the Bremen price was 13.60 ? Ans. 11.75c. Ex. 7. A firm in Savannah, during the month of July, 1912, contracted with a Steamship Company for exporta- tion of 100,000 bales^' of cotton to be shipped the following September, October, November and December to Bremen, at a rate of 35c per hundred pounds. During the shipping months, the rates ranged in their respective order, 57c, 56c, 56c and 55c. If 25,000 bales moved each month, what did this firm save or make, by contracting its shipments ahead? —Ans. $105,000.00. Ex. 8. Birdwell & Scott, Little Rock, Ark., contracted 75,000 bales of cotton for export to Liverpool, in July at 40c, for shipment in Septeinber to December, inclusive. 26See "Patches," Book III., p. 268. 27In this and the following' Problems, where ■weights of the bales are not given, it is assumed that they average 500 lbs. each ; five hun- dred pounds being the weight of a standard bale. ARITHMETIC OF COTTON 165 After shipping 14,000 bales in September and 36,000 in Oc- tober, they sold the Freight for 25,000 bales to a Yazoo, Miss, firm at 54c, of which 16,800 were shipped in Novem- ber and 8,200 in December. The whole was shipped in Bird- well & Scott's name. The rates effective in the four fall months were 65c, 64.7c, 66c and 67c. What was the net gain to the shippers and what they did lose on the sale of Freight. — Ans. Net gain $79,460.00. —Loss $11,310.00. Ex. 9. An Exporter engaged Freight transportation for 50,000 bales of cotton at 45c ; after shipping 30,000 bales, he sold the remaining Freight on 20,000 at 58c, Freight hav- ing advanced to this point. What did he gain by selling this Freight? —Ans. $13,000.00. Ex. 10. A Steamship Company during July quoted their rates for September, October and November at 50c, 52c and 55c respectively. An Exporter contracted with their Agent for shipment of 50,000 bales during these months at 50c. In September the Company reduced its rate to 40c, in October it was further reduced to 35c and in November raised to 44c. The Exporter shipped 10,000 bales in Sep- tember, 5,000 in October and 35,000 in November. What did he lose by contracting ahead on this shipment ? —Ans. $19,250.00. Ex. 11. A Cotton firm in New Orleans contracted with a Steamship Company's Broker in July for shipment of 26,000 bales of cotton to Havre at 45c. In September 3,000 bales were shipped ; in October, 2,000 ; in November, 9,000 ; and in December, 12,000. The quoted rates effective for those months were 50c, 53, 44c, and 40c, respectively. What did this Firm gain or lose by this Contract? —Ans. Lost $1,900.00. It may be stated that it takes practically 2c per pound to .cover all expenses attached as a charge for Export Cotton. 166 ARITHMETIC OF COTTON Contingencies that arise, as reduced Freight Rates, lessened Interest Charges, Discounts on Exchange, Cheaper Rents and Clerical help, are factors that can reduce this expense. Exporters contracting cotton for future shipment in the summer when Freight Rates are generally cheaper, must assume some risk, as Ocean Rates fluctuate, and may be lower at shipping time than when contracted. It should be remembered that if one Exporter books his contemplated shipments ahead, at the same time many others may do the same thing, and if one has a profit of say, 25c per hundred pounds on Freight, active competition among Shippers for Export may cause a loss of it all. It must not be assumed because of the fact that an Exports er has a profit of one dollar Or more in a fortunate Freight Contract, as appears between the difference of Contract price and that obtaining later in the season, that this fact alone gives the profit. The profit must be made in the buying. For illustration, let it be stated that a firm in Jackson, Miss., has contracted shipment for 6(r,000 B/C at 40c in July. During the fall months Rates range in the order, 52c, 57c, 55c, and 61c out of New Orleans. The Shipper has a difference for a profit of 12c to 21c per hundred pounds, or 60c to $1.05 per bale. If in September cotton is bought in Jackson at 12c M/B, based on a 52c Ocean Freight Rate, the Shipper would have a profit of 60c a bale to his competitor's nothing, and would be in position to reap a rich harvest. But had this competitor contracted cotton at 40c., the same as the first Buyer, then both would be on an equal footing for competi- tive bidding, or by acting in harmony, both could retain a handsome profit. CHAPTER V. SECTION VI— EXCHANGE. •CHECKS AND DRAFTS. Payments liquidating claims for cotton often involve the use of large sums of money, to avoid the handling of which, the use of Checks and Drafts are employed. Orders drawn on banks, individuals, firms or corporations, for immediate payment of money are called checks. Checks are generally used in the payment of local claims. They state the date, place, amount, and the name of the bank or firm to make the payment. A written order to an individual, firm or bank for the payment of money is called a Draft, and usually on some distant point. A Draft for immediate payment, is termed a Sight Draft. If its payment is directed at some future time, it is de- signated a Time Draft. Drafts made by one bank upon another, are sometimes called Bills of Exchange. When a Draft does not sell for its face value the Ex- change is made at a Discount. When it commands face value, its Exchange is made at Par. When a Draft is sold for more than face value, the Ex- change is made at a Premium. Drafts written at one place to be paid at another are drawn to be paid at the other place. A person draws upon another, when he writes the Draft to be paid. Drafts drawn for payment in any country having the same currency, are called Domestic Drafts, and the Ex- 168 ARITHMETIC OF COTTON change is Domestic Exchange in .contradistinction from Drafts drawn for Foreign Account. Drafts are sometimes not paid when presented, but are accepted to be paid in a certain number of days. In such cases the word "accepted" is written across the face of the Bill, usually in red ink, with the signature of the acceptor, date, and place of payment, if desired. ■ Drafts are similar to Checks in Showing the amount, date, place of the maker, the one to whom the money is to be paid, and the name of the remitter. There are. always three parties to transactions in Ex- •change. The Drawer, or person making and signing the Draft; the Drawee, or person to whom the Draft is ad- dressed ; the payee, or person to be paid. The Payee may be the one to whom the money is to be paid. Note. — 'For example, a person in Memphis, Tenn., wishing $1000 paid to himself in New York, may put $1000 (if Exchange is at Par) in a Memphis Bank, have the Memphis Bank write a Check (Draft) on some designated New York Bank for $1000, and with this Draft in hip possession, he presents it to the New York Bank on arrival there, which Bank will pay him the $1000 desired. Exchange is a convenient method adopted by our bank- ing institutions for payment of sums of money for a party in one place, to a party in another place, without actually transmitting the cash. The risk and trouble of sending the money is thus avoided each time a Draft is made. The R(;tte of Exchange is- a certain Rate per cent, cal- culated on the face of the Draft to determine the cost for getting the Exchange value and charge for transmission. The Course of Exchange refers to the price paid at one place for a "bill of Exchange" on another. This price or rate is variable, fluctuating as the demand for Exchange fluctuates. Bills of Exchange are Drafts drawn by one bank upon another in a different place. ARITHMETIC OF COTTON 169 Under the United States Banking System/^ it is usual for banks to place a portion of their funds as credits in other banks. By so doing, greater facilities are offered for the payment of money at distant points through the instru- mentality of the Draft. Banks receiving these credits are termed Correspondents of the Bank, or Reserve Agents. If a Bank in Waco, Texas, has deposits amounting to $500,000, a part of them may be placed in banks in Hous- ton, Galveston, St. Louis, Chicago, and New York. Let it be stated that the Houston bank has $25,000 of this money; a Galveston bank $25,000; a St. Louis bank $50,000; a Chicago bank $75,000, and a New York bank $100,000, making a total with these Reserve Agents of $275,000, and leaving with the Waco bank a deposit of $225,000. Of this amount, smaller deposits may be placed with other banks in Texas, or perhaps with banks in Mem- phis, Altanta, Philadelphia, Cincinnati, Denver, and San Francisco. Parties in Waco desiring to pay certain sums of money in any of the cities mentioned, buy Drafts from the Waco bank payable by some bank in the city designated. The purchaser who receives the Draft, transmits it by mail to the one to whom it is payable, who in turn, upon its re- ceipt, presents it to the bank on which it is drawn and re- ceives the money or takes credit for it. Should a person in Waco wish to pay a claim in Little Rock, Ark., he would buy a Draft on St. Louis, Chicago or New York from the Waco bank, remit this Draft (called Exchange), say, on St. Louis, to the Little Rock payee (creditor — claimant), who upon its receij^t gives the Waco person full credit for it, as he can have the Draft cashed at face value at his bank in Little Rock. 28Eeoent enactment of new laws has created a new financial or banking system for tlie United States. The meaning of the above statements is not impaired by reason of such fact, 170 ARITHMETIC OF COTTON Every bank in Little Rock no doubt has deposits in St. Louis similar to the Waco bank, hence can cash the Waco Draft on St. Louis at Par. Buying and selling Drafts is called Buying and Selling Exchange. Calculations respecting Exchange between one place and another involve the principles of percentage. Outside of banking channels, individuals, firms and corporations sometimes place money in other places for credits and utlize the principles of Exchange in the trans- action of their business. DOMESTIC EXCHANGE. Domestic exchange has reference to the issuance of Drafts in the country where they are drawn. Drafts drawn in one place in the United States, to be paid at some other place in the same country, are Domestic Drafts. Charges for Bills of Exchange, or Drafts, vary as the demand for them increases or diminishes, requiring calcu- lations to determine the value of the fluctuations, which are shown in the following: PROBLEMS. Ex. 1. A wishes to remit $500 to New York in payment of a Margin on 500 B/C. The Exchange being 1-4% Premium, what is the cost of this Draft? — Ans. $501.25. Note. — A wishes to send $500 to New York, and wants a bank to send it for him. Th< bank knowing the rate to be J of 1%, agrees to send the money for $501.25. A then pays the bank $501.25 ; the bank writes a Draft for $500, hands it to A, who encloses it in an envelope and sends it by mail to the man he owes in NewYork. The bank keeps the $1.25, it being the amount it charges for giving the sender the privilege of Exchange ; that is, the home bank will Exchange $500 from itself to some one else in New York, and issue the accommoda- tion for $1.35. ARITHMETIC OP COTTON 171 The bank is safe, because it receives from the sender in this instance $501.25 in cash before it issues the Draft for the $500. The statement is, that Exchange between the two places is "J of 1%." Explanation : (1) One Cent is $.0100 (4 Decimals) i of 1 Cent is .0035=3i Mills. The bank charge is 2J Mills on the Dollar=25c on $100, and 5 times that on $500=$1.25. (2) The Exchange being at Premium, it is added to $1.00 and =$1.0025. $1.0035 X500=$501.25. Ebmakks. — It will be noted that the J%, expressed Decimally, ne- cessitates the use of 4 Decimals. The usual practice is to divide the sum to be paid by 4 and point off 4 Decimals in the quotient. Example : $500.00-=-4=$1.2500. Ex. 2. A Cotton Merchant in Macon, Ga., wishes to re- mit $1200 on account in payment on a cotton claim, to New Orleans. What will be the cost of the Draft at 1-8% Premium? — Ans. $1,201.50. Suggestion. — Solve as the preceding Example, No. 1. As the Rate is a certain per cent, on or off the Dollar, the Dollar can be used as a base on which to make a Rule. TO FIND THE COST OF A DRAFT. . (a) For Sight Drafts. RULE — Add to 1 Dollar the rate of Exchange, if at Premium; s«&- tract from 1 Dollar if at Discount; multiply the sum or remainder by the face value of the Draft; the result will he its cost, including Exchange. Note. — As Sight Drafts are generally used in payment of Domestic Cotton, a time consideration does not enter into any calculation in determining their value or coft of Exchange. Ex. 3. Tom Anderson bought 50 B/C in Ft. Smith, Ark., amounting to $2,580, for which he gave a Sight Draft on 172 ARITHMETIC OP COTTON New York. Exchange being 3-4% Premium, what was the face value of the Draft, and what did the bank charge for making the Exchange? — Ans. Face $2,599.35. Exchange $19.35. Note. — It is usual for purchasers of cotton, buying from interior points, to pay the Exchange on the money, unless otherwise stated. Ex. 4. A Commission Merchant at Savannah, Ga., sold 60 B/C for $3,650. After deducting his Commission of 2 1-2% and Exchange at 1-8% Premium, what amount wap remitted in the Draft to the owner at Milledgeville? —Ans. $3,554.30. Ex. 5. A Cotton Buyer locating at Ennis, Texas, to buy- cotton for the season, drew a Draft on a Chicago bank for $10,000 ; Exchange being at a Premium of 3-4%, what did the Ennis bank pay for this Draft ? —Ans. $9,925.00. Ex. 6. An Agent was allowed a Commission of 1% to buy cotton. After purchasing 100 bales, valued at $5,750, he wished to make a Draft on "his house" at Philadelphia, sufficient in amount to cover his Commission, and Exchange at 1^% Premium. What was the face of the Draft? —Ans. $5,822.02. Ex. 7. A Merchant in Charleston bought 200 B/C from a Dealer in Columbia, after business hours, by telephone, for which he offered f. o. b. Columbia 9 3-8c all round and pay the Exchange, or 9 13-32c, and the Dealer pay the Exchange. The Dealer accepted the latter proposition. The Exchange was 14% Premium. The cotton weighed 104,000 lbs. Did he gain or lose, and how much? —Ans. Gained $8.05. ARITHMETIC OP COTTON 173 (b) For Time Drafts. Time drafts are more particularly utilized in the pay- ment of Export Cotton. A Bill not paid at Sight, but drawn to mature at a stated time after Sight, (date) presents a mixed question of Exchange and Bank Discount.^' Solving Problems involving the use of the two, re- quire the use of the Rules necessary for the solutimi of each, biit into the one computation, the two must be com- bined. Three Days of Grace are still permissible in some of the States. Bank Discount is Simple Interest on the face of the Note or Draft for the time to elapse fronji date of dis- count until maturity, therefore it is Simple Interest on the face of the Note or Draft paid in Advance. The Proceeds of a Note, Draft or Account, is the amount left after deducting the Bank Discount. TO FIND THE COST OF DRAFTS PAYABLE AFTER SIGHT. RULE. — Find the Proceeds of One Dollar at Bank Discount for thef stated time, at the Rate -prescribed, or the Legal Rate, if no Rate is expressed; to this add the Rate of Exchange if at a Prenvium, or sub- tract if at a Discount; multiply the result by the face of the Draft. PROBLEMS. Ex. 1. A Buyer in Selma, Ala., bought 100 B/C valued at $5,000 for which he presented a Draft on New York, payable in 60 days, with 6% Interest. Exchange being %% Premium, what amount did the Selma bank allow as a cash credit for the Buyer? ^Ans. $4,985.00. 29Baiiks will not buy Drafts and pay cash for them unless they know the party on whom they are drawn Is fluanoially responsible. Not all banks deal in Exchange. MB— 7 174 ARITHMETIC OF COTTON Explanation : The Interest (Bank Discount) on $1 for 63 days =$.0105 The Premium of Exchange on $1 at i% = .0075 The difference is .0030 As the face of the Draft is $5,000, the bank will deduct 3/10 of 1%, $15, leaving $4,985 to the Buyer's credit. This is a brief, clear way to obtain the result quickly. The Interest must be calculated before attempting to formulate the statement. By the Eule. — Interest on $1 for 63 days =$.0105 $1 —.0105 = .9895 .9895+$.0075 (Premium) = .9970 $.9970X$5,000=$4,985.00 We may again state the Problem as follows, for clearness of con- ception : Find the Simple Interest on $5,000 for 60 days, plus 3 days of Grace, at 6%, which =$52.50 The Premium of Exchange = 37.5U Difference between Interest and Exchange = 15.00 .to be deducted directly from the face of the Draft. $5,000 — $15=$4,985. The Bank Discount on $5,000 being $52.50, deducted from $5,000 leaves the Proceeds, =$4947.50 To which add the Exchange = 37.50 Cost of Draft =$4985.00 Ex. 2. I sold ,360 B/C for $21,200; accepted n 90-day Draft on New York at 6% Interest, on which the Ex- change was 1-8% Discount. What did my home bank pay me for it? — Ans. $20,844.90. Ex. 3. A Texarkana Firm gave a 30-day Draft for $45,620 in payment for a list of cotton. With Interest at 6% and Exchange at 1 1-2% Discount, what, would be the value of this Draft in Texarkana, with no Days of Grace ? —Ans. $44,707.60. Ex. 4. H. Kempner H 63 > c n 1/1 Tr H rt 2; p ^ H D 218 BUYING SPOT COTTON large scale, and through and by such means a large volume of business passes through his hands. Export or Spinner Buyers. — The Spinner Buyer as- sumes a different role in the traffic of cotton from any other class of Dealers. He takes cotton from Local and Intermediary Buyers from many different points in his territory, (in which he is centrally located, or nearly so) , in mixed grade lots just as taken by the Local Buyer from the Growers. He buys in quantities ranging anywhere from ten to a thousand or more bales from each of his representatives in his daily transactions. His territory may comprise 6, 8, or 10 counties, half a State, parts of two or three States or several States, de- pending entirely on his prominence in the Trade, financial standing and connections, and the magnitude of operations undertaken. He may operate alone, or through firm representation. If buying for Export, he keeps in close communication with his correspondents by cable, advising as to amount of cotton bought, where assembled, when shipped, and by what road and vessel it is moving. These latter statements are also covered in the Docu- ments, when the shipment is made up. When buying for Mill requirements, the representative looks for and purchases only such cotton as the Mills de- mand, which usually prescribe specific Grades and even- running.^ All Buyers must have a guide for this procedure; this guide is the Market,- and serves the Trade the world over. Some one, or several, make the Market, and before going more extensively into the subject of Buying Spot Cotton, it is necessary to know HOW COTTON MARKETS ARE MADE. 2See Spinnable Values, Book I, page 77. BUYING SPOT COTTON 219 EXCHANGE COTTON MARKETS. Daily Transactions. — The New Orleans Cotton Ex- change^ opens its doors at 8 A. M. At that time there are posted on the blackboard reserved for the Liverpool Market the opening prices,* then the noon prices and the 2 P. M. quotations, Liverpool being six hours ahead in time. Members begin to congregate soon after doors are opened, but no trading in Futures until 9 :05 A. M. At 9 o'clock quotations begin to arrive from New York, which Market opens at 10 A. M., Eastern time, equal to 9 A. M., New Orleans time. At 5 minutes past 9 A. M. the Future business starts for the day by the official call. This is made by the Superintendent' of the Exchange stepping upon the rostrum, seizing a wooden gavel and by a blow with it upon the rostrum opening the trading. He calls out the current month, it being the first trad- ing month, and continues to call the twelve months, be- ginning with the current month and ending with the twelfth one thereafter, or just "so far as there is a desire to trade." Each month is called aloud in a way that it can be heard everywhere on the floor, and sufficient time is given for the price for that month to become stationary before the next month is called. Every trade made during the call is repeated aloud by the Superintendent. For instance, say that Smith and Jones sell to Williams and Brown, the Superintendent would call out: "Smith and Jones to Wil- liams and Brown, one January, 12 cents," — which trade, as well as others, is recorded on the blackboard reserved for New Orleans quotations, and is there visible to everybody. Besides that, there is one, or, if trading is active, two. sThe operation of the New York and New Orleans Cotton Exchanges are so nearly similar in their routine transactions as to require no severance in giving a description of them. *First prices made for the day. "Or an appointee of the President or Vice President of the Exchange. 220 BUYING SPOT COTTON Exchange Officials standing inside the "ring," marking on the board throughout the day, until 2 :30 P. M., when trad- ing officially closes. Every trade that is made in Futures — price, by what brokerage house it is sold, and by what brokerage house it is bought, goes on the blackboard and is kept on record in the Exchange office. A part of the Exchange floor is set aside for this Future business, but is accessible to all of the members without discrimination. In this portion is the so-called Ring or Pit, a circular structure for the purpose of preventing jamming and confusion among the many Brokers who as- semble around it to execute their orders. After the "call" is over, trading across the Ring is done in some or all of the twelve months, instead of only the month called and this character of trading, where the mem- bership call aloud their trades across the ring to each other, is known as "ring-trading" or "ring-trades;"^ and, as stated, occurs during the intervals between the opening and noon calls, and noon and close calls. One Broker may call out that he wants to sell a March (Contract) at 12:03, while others may want to buy March at 12.02. Others may, again, cry out that they want to buy May at 12.10; others offer to sell July at 12.18, and so on. If any of these offers to buy and sell are accepted, the trades are closed and the blackboard receives the rec- ord. No trading is allowed by private agreement. All trades between Brokers for the account of others must be made by loud outcry across the Ring. If the Superintendent calls a month during the official calls, and no one offers to trade during the time, the month is called out three times, then he knocks it down as "None." If some one offers to buy at a certain figure but no one offers to sell, he calls out, say, "Smith and Jones January bid 12 cents," and having called it three times, he knocks it down as "January bid 12 cents," and vice versa; if a 6See "Eings," "Eing Settlements," p. 325. BUYING SPOT COTTON 221 Broker offers to sell, say, March at 12.03, the Superintend- ent making the call, cries out, for instance, "Smith and Brown, March offered at 12.03," and having done so three times, he knocks it down as "March, offered at 12.03." The call in any position (month) is over when the price does not vary any more after having been called three times, marked each time with a blow from the gavel. As these calls are made to buy and sell Cotton Contracts, the prices at which they are quoted are placed on the board and flashed by wire to all foreign commercial centers the world over, and to every city and hamlet in the cotton belt of the United States at which cotton may be bought. The Exchange quotations are sent to all the leading cities and towns of importance by telegraph, and from these the telephone gives wider circulation. These quotations are known as "Cotton Exchange Market Quotations," and give to the Trade and Growers their MARKET. OPERATIONS OF LOCAL PEIMARY BUYERS. Let it be noted that no class of Buyers operate independ- ently ; one class is more or less connected with and depend- ent on the other. A Local Buyer must have some outlet for his purchases ; the Intermediate Buyer needs a similar connection; the Exporter operates with the Local and Intermediate Buy- ers in securing supplies for his foreign connections. The Local Primary Buyer usually arranges with some large Dealer to supply him with the Market during the season, or furnish him with "limits." To get the Market, means to get the cotton quotations as sent out by the Cotton Exchanges daily, and transmit them to the Local Buyer as often as the changes in the quotations justify doing so. From these quotations, as prices, for Future Cotton, the Local Buyer figures his home price, if a definite price is not given by another, to be paid the Farmer, at so many points 222 BUYING SPOT COTTON "on" or "off" a certain Future Month. The number of points on or off are given by the Dealer, and changed when necessary. Under such conditions, the Local Buyer must finance his own purchases, use his executive ability, business judgment and best interests for himself. Local Buyers often arrange with some telephone or tele- graph company to give them the Cotton Market three or more times a day; Opening, Noon Call and Close of Liver- pool, New York and New Orleans Cotton Exchanges, if no more. Cotton Limits. — Local Buyers often receive certain prices one or more times a day from large Dealers with whom they connect themselves in a business way to handle cotton. These prices are termed "limits." It means that it is the best price, or "limit," the Dealer will offer the Local Buyer at the moment for his Cotton. The Local Buyer knows just how much he is to get for his cotton each day, and if he buys, must do so under the limit price, to make any profit for himself. This limit is for Middling basis, with stated additions "on" for the Higher Grades, and de- ductions "off" for the Lower ones.'' A Local Buyer may operate on a salary for some firm or large Dealer, and if so, his plan of operation in the local Market is not unlike that of buying independently. A Buyer operating on a salary, stationed at some local point, gets the opening Market, as other Buyers, about 9 :30 A. M. for Texas interior points; for the other Southern States, one hour earlier in Eastern Time territory. A salaried Buyer may buy direct from the Farmers' wag- ons, or buy in quantities from Local Buyers, after the Market closes. Dealers in merchandise often buy cotton direct from the Growers, and many ginners in the South are primary Buy- ers, also. 'See Differences, Book I, p. 93. BUYING SPOT COTTON 223 Cotton may be bought to fill orders acceded ; or bought on personal or firm account for speculative purposes. If. bought in fulfillment of orders, such orders are in the form of contracts, usually, either written or verbal. Local Buyers selling Short or Spot Cotton on hand, con- firm the sale by signing "confirmation papers," for the to- tal quantity sold, although the shipment may be made in broken lots at different times. Such papers are generally made in triplicate form signed by both Buyer an^ Seller. SECTION II. A REPRESENTATIVE COTTON FIRM. Note. — To give a better idea of cotton, transactions as they actually transpire with Local Primary, Intermediate and Export Buyers in their daily business during a cotton season, and to show the move- ment of cotton from primary points to places of concentration, or to destination, the following operations of a cotton firm are given. The Principal offices of this firm are, say, located in New York and Liverpool ; the membership composing it are also members of the New York and Liverpool Cotton Ex- changes, and all the other principal Cotton Exchanges of the world. This House (firm) is one of the largest buyers of Spot Cotton in the Trade, and the character of business trans- acted by it in Spot Cotton is parallel to that carried on by other firms engaged in a large business. It has direct connection with Foreign Markets, through branch offices in Bremen, Germany, Havre, France, and many other com- mercial centers and cotton spinning districts as distribut- ing points, giving it great advantage in securing a broader outlet for the disposition of its holdings or acquirements. A firm of such magnitude and exceptional facilities for buying and selling cotton possesses a distinction that can not be had by competitive operators whose representation in the world's Markets are not so broad. 224 BUYING SPOT COTTON A great percentage of all Dealers handling large invest- •ments in cotton are directly or indirectly represented in foreign commercial centers by and through which medium greater facilities are offered for securing prompt sales. Such Dealers are almost constantly in the Market. Many firms operating in the South have representation on the Cotton Exchanges and abroad, just as the firm mentioned, with branch houses at Savannah, Atlanta, Mem- phis, Little -Rock, Dallas, Fort Worth, Waco, Galveston and many other places. For illustration, let us assume that the representative firm has a branch office at Waco, Texas, from which it covers a large part of the territory surrounding it in its trade relationship. Contributory Territory. — It may be stated that adjacent towns handling cotton which finds exit through Waco dis- trict office 'are Oglesby, McGregor, Crawford, Clifton, Val- ley Mills, Meridian, Morgan, Dublin, DeLeon, Whitney, Blooming Grove, Corsicana, Hillsboro, West, Hubbard City, Marlin, Bremond, Lott, Eddy, Lorena, Moody, Temple, Cameron, Belton, other towns on the Santa Fe Railway and many other points. At some of these towns, say at Temple, Hillsboro and Corsicana, the Waco firm employs salaried or commission Buyers, who not only buy cotton at these respective places, but take it from other Buyers at the small villages and ginneries nearby, and when a quantity of sufficient amount has been accumulated, it is shipped under instructions from the Waco House to some designated point for concentra- tion, or assembled at the local compress for compression, then forwarded, usually in 50 bale lots. If for Mill delivery, it is put out in even-running Grades ; if to other Buyers or for Export on basis, then it can be shipped in lots of Mixed Grades. Buyers operating on limits for this firm at those towns selling through Waco, figure the values for the Higher and BUYING SPOT COTTON 225 Lower Grades, as previously stated, or receive instructions designating the differences to apply. The practice among all classes of Buyers, small and large, is to await the opening Market in the morning before at- tempting the purchase of cotton. There can be and often are exceptions to this rule, and it is a custom among some large Buyers not to buy until after the "close" in the evening. A large Dealer who has contracted — say 10,000 bales of cotton in May — for delivery in September, October, Novem- ber and December following, at 10 cents Middling Basis, with agreed differences, can often operate in the Market independently of Exchange quotations, provided the price of Spot Cotton has» declined at delivery time ; but in prac- tice such operators generally stay near the quoted values. Such trades are protected by "Hedging"^ except in rare instances. All places mentioned as operating through Waco, are in "common point territory," taking the same Freight Rate to Houston and Galveston.^ The Waco House being in close touch with the New York and New Orleans Cotton Exchanges, receives constantly throughout the day the quotations for Futures, conditions and contingencies that affect the Market, and at the close the prices for Spots in the different cotton Markets of the world.^" From this data it figures a working basis for its territory, and what applies for a basis for Waco, can be used at the other contributory points. The Waco House may operate on limits from New York. The New York and New Orleans Cotton Exchanges quote all the twelve months as Future Months, but by customary 8See Hedging, Book II, p. 109 ; Book IV, p. 331. »The rate to Garveston is 6 cents per hundred pounds higher than lor Houston — Galveston Kate 51 cents ; Houston 57 cents. loSee "Difference Sheets," Appendix. 226 BUYING SPOT COTTON usage of the Trade and membership, six of the twelve months are recognized as "active" or "Hedging Months," and from these active or governing months, the prices for Spot Cotton at any point are calculated, and sent out to all correspondents as their basic price for purchase. The six governing months are January, March, May, July, Oc- tober, and December. August and September are some- times "active." In buying and selling Contracts on any of the Cotton Exchanges, (N. Y. or N. 0.) some one or more of these six months are the ones dealt in. Liverpool Cotton Exchange quotes the Future Months coupled — as May- June; June- July; July-August; August- September, etc.; meaning cotton contracted for delivery there can be delivered in either one of them. If May-June is sold, the Seller can deliver in either one of these two months. Assuming that the season has arrived for the movement of the new crop, August Futures being quoted 15 points under August Spots, the Waco House calculates its basic price as follows: Taking Galveston as an exporting point, the interior price, based on New Orleans quotations, will be found. August Futures" 12.35 Plus, Points .15 N. 0. Spot Middling value Freight to Galveston Brokerage Expenses and margin Points to be deducted Middling interior value 11.79^2 iiFuture quotations are for Middling, and for illustration here, only. Points are often added to or taken from tlie Future price, for a Spot base. 12.50 .55 .03 .121/2 .701/2 BUYING SPOT COTTON 227 This would give an operating base of 11.80 to be used by all Local Buyers, whether on salary or "limit," at their respective points. The firm having representation through its Waco House may have contracted with Spinners months before at a higher price than that represented as figured here, for large quantities of cotton, but it being customary with large Dealers to follow the ups and downs of the Market at the moment, the price figured here is that obtaining for the August quotations. Operating in Detail. — To get a starting point, let us as- sume a Local Buyer representing the Waco House at Gates- ville, Texas, buying on "limits," takes cotton direct from the Farmers' wagons. His limit is 11.80," and he must buy under that figure to make a profit ; the greater he makes his Discount from this price, the more profit to accrue to himself. This Buyer goes to the wagon on which there are one, two or more bales, in the presence of the owner, and often ten, twelve or more Farmers who have cotton for sale. He cuts a slit ten to twenty inches crosswise between two of the bands, from which cut he takes a sample of cotton four to six ounces in weight, examining it carefully for dirt, stain,, trash, gin cuts, or any foreign substances affecting grada- tion, and classes it mentally as to Grade. After examining this sample he cuts the other side of the bale similarly, going through the same proceeding as at first in examina- tion of the other samples drawn. If other Buyers" are on this Market, they pull cotton from the same cut, or make other cuts and draw therefrom, and examine the cotton themselves as to its Grade, and on their opinion as to its quality, each makes his bid or offer for it. 12A pound of cotton at 11 8/10 cents. isCotton being a cash commodity, the possibility of gaining im- mediate profits induces many to engage in handling it. 228 BUYING SPOT COTTON Both sides of the bale rarely show the same quality of cot- ton." In such instances the Buyers base their purchase price on the side of the bale showing lowest quality, unless it is apparent beyond a doubt that the Low Grade is super- ficial and not of sufficient amount to affect the whole bale ; in such case the cotton is taken at its true grade or best part. After these examinations of the cotton offered fbr sale, the buyers begin their bidding. The Local Buyer^' having classed, say, three bales on one wagon as averaging Middling, offers 11.70; another Buyer 11.72Vi; the Local Buyer may raise it to 11.75, and if no other Buyer bids higher, he gets the cotton at that figure, realizing a profit of 5 points, or 25 cents on each bale of five hundred pounds. If competition is stimulated among the Buyers, the price may be run to the extreme limit of 11.80 ; in which case no profit results to the Local Buyer who takes it at that price. If the Market is firm with a tendency to advance, compe- tition becomes very active, but if adverse conditions show reflections against the Market, speculative buying becomes cautious, and close bidding is not so prevalent. If the Growers accept the prices offered, the cotton is deposited in a cotton yard or warehouse, weighed by a public or some designated weigher, on whose weights the total price of the cotton is calculated, and paid for at once. Pay- ment is usually made by check drawn on some local bank. In their daily purchases Local Buyers often accumulate variable quantities of cotton, which they usually sell after the Market closes to other Dealers who handle in larger quantities. Transactions involving large quantities of cotton and im- mense sums of money are carried on among large Dealers after nightfall. i*See Bale Formation, Book I, page 14. isTerm iised to represent the Waco correspondent in this instance. BUYING SPOT COTTON 229 The plan of operation for taking cotton at primary points as herein described is similar at most places in the South. In some of the local Markets, Farmers never drive their wagons on a street or market place to sell cotton, but in- stead, they draw samples from their own bales while they are at the ginnery, or some other convenient point, which drawn samples they exhibit to the Local Buyer, who in turn bids for the cotton as shown by sample. Growers are desirous at all times to know the state of the Market, and from the Local Buyer, or other Dealers and the newspapers, they keep in close touch with the trend of it. It is quite common, if the Market is weak, to hear buyers say : "The Market was off 10 to 12 points yesterday. The 'Close' was down that much and the tone of the Market was irregular. I look for a lower Market today, as yester- day's cables reported Liverpool sales only 6,000 bales ; Man- chester Spinners and other Foreign Buyers were practically out of the Market, and exporters claim they are receiving but few orders for immediate or forward delivery." The Grower is naturally apprehensive of the Market, and not caring to risk any loss, on hearing such statements, the inducement to sell has all the emphasis needed to cause him to part with his cotton. The sale may be at a loss, yet for fear the loss may be greater, he sells at once to prevent it. Local Buyers will not often bid on cotton before receipt of the Market, and Growers are told : "The Market has not come in yet, and I prefer not buying until we get it," or "my 'limit' has not been given me for the day." If the Market is firm with a tendancy to advance, the Buyer who executes all of his cotton transactions with fairness is just as ready to tell the Grower the Market is firm, the demand good, and is equally ready to say: "I look for a better Market today," or "Inquiry for cotton is active and better Premiums are offered for the Higher 230 BUYING SPOT COTTON Grades," or "Liverpool bought heavily yesterday and the demand for Export Cotton increases." These statements can be made by all Buyers with im- punity, but for any Buyer to attempt to forecast the Market for the future is inflicting upon himself a possible punishment to be received sooner or later. If he predicts an advance, and it does not come, but a decline follows instead, the Grower who has held cotton upon the advice of the Buyer suffers a loss, and censures the Buyer; when, perhaps, the advice was conscientiously given. DAILY FLUCTUATIONS. Spot Buyers at primary points, as Well as Intermediary and Export Buyers, follow the advances and declines of the daily Market. Local Buyers are rarely changed on limit or basic prices, unless variation in price is as much as 1/16 up or down. Should the Market advance or decline 1/16, and again 1/16, 1/8 or more during the day, the Local Buyer is kept constantly advised. The character of the business handled by the Salaried Buyers is the same in substance as the representative one buying on "limits," except that no Classer (Take-up-man) is necessary to visit their places of business and take up the cotton bought by them, as such Buyers are good Classers themselves. They keep record of their own transactions, reporting' often to the parent office, to which they send samples of all cotton taken, and bill out their purchases as instructed. They remain permanently located at their re- spective points during the season, or may be moved from place to place as circumstances and contingencies may de- mand. Quotations are given them often during the day, should the Market fluctuate and require it. BUYING SPOT COTTON 231 REPORTING COTTON SALES. When changes of "limits" or basic prices are given, all cotton bought on such prices are reported at once. After the Market closes and on up to 9 o'clock, all buyers for the Waco office report the results of their day's purchases. After having received the final report from all Buyers, the Waco office knows at once the total purchases made for its account in its territory, and in like manner reports by telegraph or cable the result to the parent office in New York or Liverpool. All Local and most Intermediate Buyers make primal purchases of a miscellaneous class of cotton, taking any and all Grades offered by the Growers, and arrange the bales in convenient rows at delivery place, by placing them side by- side on their edges, in which position they are ready for the Take-up-man,^^ when accumulated in sufficient quantity to demand his visit. TAKING UP COTTON BY THE INTERMEDIARY BUYER." As bought stocks accumulate at the different primary points, gathered by Buyers making purchases on quoted limitations, and the cotton being arranged as stated, the Take-up-man makes his rounds over the district, after having previously notified the different Buyers the date he will visit and take up the cotton bought. This listed cotton to be taken up is sometimes in ware- houses, but more often in an open yard, necessitating the Classer's going through the lot in the sunshine or under cloudy conditions, which requires the strictest scrutiny on his part to get the correct gradation. isThe traveling representative of the Waco office (or any large dealer) who visits the Local Buyers, classes their cotton, takes it up and pays for it. He is a good business man and a good cotton Classer. i7He may be and often is an Exporter. 232 BUYING SPOT COTTON The manner of taking is about as follows: The Take- up-man in company with other Local Buyers cuts the bales on the top side as they are arranged side by side, cutting the bagging in a different place from the original cut, between different bands, cutting deeper and taking a sample of fully eight ounces therefrom. As the bales are sampled and classed, the Classer attaches a tag to each bale, showing its number, and the name of the firm buying it. The bales are numbered consecutively. The tags are printed in dupli- cate or coupon form. Into each sample drawn, the coupon tag is placed and securely rolled therein. This coupon tag gives the identical number and name as shown on the remaining tag hanging to the bale. Sometimes the tag will, show the Grade of cotton of the bale and sample. As the samples are drawn, they are securely and closely rolled, and tightly pressed in a sack prepared for such pur- poses, and forwarded to the Waco office. Practically all the cotton bought from Local Buyers is sold "free on board" the cars, or railway platform at load- ing point. Before shipment, each bale is numbered consecutively, and some Mark placed upon it for further identification, usually in three letters, as TOM, HON, BEN, WIL, etc., known as the Shipping Marks. Each shipment is generally under a different Mark. li the tag is lost, the Shipping Mark and number identifies the bale. Cotton for Export or destined for Mills often has four letters for identification. The Marks are placed on the bagging with stencil or brush. For some Foreign Mar- kets, they are placed on heavy, white cotton cloth and at- tached to the bale, secured by or under the bands.^* After all the bales are classed, properly tagged and mark- is All Marks on Export Cotton must be obliterated except t\w Export Mark, wbicb B/L must show. BUYING SPOT COTTON 233 ed, they are weighed, if the original weights are not ac- cepted. SECTION III. PAYMENTS FOR LOCAL COTTON. If the cotton was bought on basis, a calculation is made showing the average Grade and price, the total estimated amount is settled for at once, by check on. a local bank, or Exchange (Draft) drawn on some firm or bank at some other place. Drafts on foreign concerns are not always accepted at once as payments, unless the local bank approves or de- clares they are good, or the firm on which it is drawn is known to be trustworthy and reliable. If the cotton is bought at a price "hog round," (so much as it runs without grading) the total weight being ascer- tained, the sum to be paid for it is easily calculated. It will be noted that in taking up a list of cotton as described, the Classer cuts only one side of the bale, (a practice quite common in the South in the early part and during fall season) if no weather damage has appeared, but after each rainfall on the fields of open cotton and the damage increases it becomes necessary, hot only to examine both sides of the bales, but the ends should be carefully scrutinized, to determine what proportion of bad cotton is mixed with the good. CONCENTRATION. After the different Take-up-men have gone over the ter- ritory and taken up all the cotton bought, it is localed into Waco" for compression. isOr, it may be part, or all of it, concentrated at some other designated place for the compress, and Through Billed from there to destination. 234 BUYING SPOT COTTON Assembling cotton from so many sources, and in such variable quantities, accumulates hundreds, and sometimes thousands of bales, during the busy part of the season. A large percentage of this cotton has been sold for forward delivery before its arrival at the compress, prin- cipally to consumers whose requirements stipulate specific Grades, and to secure these definite Grades necessitates the constant presence at the compress or places of concentra- tion, of expert Olassers, who go through these diverse ship- ments of miscellaneous Grades, assorting them into specific or even-running classes as are required to go out on orders. As a perferable method when occasion may require, and for convenience, samples sent in by the Take-up-man are laid upon tables in rooms specially prepared for such work at the Waco ofl^ice, and are passed upon there by the quali- fied Graders, who keep a list of them properly marked and wrapped, from which list the instructions are given to the compress authorities, notifying them what bales (usually by number and marks) , shall go out on certain orders. Cotton classed out in this way requires no experienced Classer at concentration point. To aid in expediting the work, an assistant is sometimes appointed to help get out the shipments at the compresses. Shipments are made as required by the orders in hand, and vary throughout in number and quality, ranging from the lowest to highest Grades ; each shipment numbered for the purpose of keeping track of it, and the character and quality of cotton for the order is usually specified. For example. No. 23, 250 bales Strict Middling, Fall River, Mass. ; No. 24, 300 bales Low Middling, Osaka, Japan ; No. 25, 200 bales Good Middling, Providence, R. I.; No. 26, 600 bales Middling, Barcelona, Spain, etc. As these orders are filled, notation is made of the date of shipment, from what point, the name and the number of the cars transporting the cotton, through what bank the Draft is drawn, its amount, and a copy of the Bill-of-Lad- BUYING SPOT COTTON 235 ing filed in the Waco office, all of which bear record of the transaction up to this point, and when the cotton arrives at destination and notification of its acceptance is given and the Draft paid, the deal is closed. If, however, when the cotton is received at destination the Grades of it do not come up exactly, or sufficiently near to that ordered or sold, the Draft^" will be paid in full, when the party shipping is known to be trustworthy and reliable financially; but if the differences seem too broad and can not be settled satisfactorily between the two, the matter is adjusted by arbitration." "OVERS." Accumulated "Overs." — Buying all Grades of cotton from various sources, over a broad area of territory, assembling the same at some convenient point suitable for concentra- tion, frequently leaves, after all classified lists have been made up, a mass of odds and ends, termed "Overs." A large percentage of this is often of a nondescript class or pos- sibly high Grade of cotton, the value of which may be, per- haps thousands of dollars, to be carried for indefinite per- iods, with such added costs as insurance, storage, interest, etc., before satisfactory outlet can be had justifying its sale. This is especially so after excessive and continued rainfall, or near the termination of the cotton season. In taking cotton at primary points, accepting the same in all Grades, there can be no prevention of accumulation of "overs," when from this accumulation specific classes of cotton must be selected ; but as the "overs" are retained, some of them are used in subsequent shipments, a few se- lected each time, until the end of the season, when final disposition is made in some form of the remnant. 2oDrafts are usually paid before the arrival of the cotton, if not in full, approximately so. If the Sellers are known to be financially reliable they are paid in full ; if not, or practically unknown, 70 to 85 per cent of the Draft will be paid. 2iSee Arbitration, Book II, page 103. 236 BUYING SPOT COTTON DOMESTIC AND FOREIGN SHIPMENT PAYMENTS Payments made for shipments to American Mills are designated as Domestic Payments in contradistinction to those made for Foreign Accounts. The shipments to Fall River and Providence are handled as any local shipment, the usual Documents of which are the Bill-of-Lading, In- voice and Sight Draft, accompanied with instructions to the local bank how the account is to be handled. Payments on sales destined for Foreign Shipments are made in accordance with the terms of the sale, usually stipulated by the Buyers at time of purchase, the< procedure through which the Documents shall pass, as to a certain bank or firm, the character of papers, etc., that must ac- company the Draft, which are similar to those required for Domestic Shipments, and like them must be properly in- dorsed. New York Banks handling Drafts covering shipments of cotton for Foreign Account handle them at the Rate of Exchange prevailing with the country on which they are drawn. As the Rates of Exchange on foreign commercial centers vary from time to time, the Dealers must be conversant with these fluctuations in order to be able to determine with accuracy how to calculate for them in making their pur- chases and sales. The Rate of Discount, or Premium, changes as the demand for Exchange fluctuates and whether the Draft is drawn payable at 60, 90, 120 or more days, as Drafts in payment for shipments for Foreign Account are always drawn. Shipments to Barcelona, Spain, are usually paid for with Exchange on London or Paris, while those directed to Japan are adjusted through English reimbursement, with Drafts at 60 or 90 days, ordinarily on London. Some New York Banks handle Japanese accounts, with proper indorsements, and claims for such accounts can be BUYING SPOT COTTON 237 adjusted through them at the current Rate of Exchange applying. Foreign Bills-of -Lading, like Domestic ones, usually read to "Shipper's Order," or to the order of some one who must indorse them, thus giving to them the function of a Negoti- able Document — an important feature for the bank handling the claim, and a protection to the Shipper. The Bill-of-Lading is a factor absolutely necessary in all cotton shipments, and a Document that must accompany other papers covering the shipment. THE WACO HOUSE AN EXAMPLE. The foregoing statement respecting the operation of the Waco House in a Texas territory, is intended to show how and through what channels cotton is received at primary points, accumulated at others, re-divided into separate lists and directed to different ultimate destinations — ^how it gets .from the field to the factory. Be it remembered, the Waco House is a subsidiary one, representing a large firm operating in all the Markets of the world, and while subsidiary in position, it carries into execution cotton contracts as though an independent organ- ization; although no trades are made by it without the parent firm being advised at all times. Its manner of purchase, sale and shipment of cotton is made by its own guidance, yet under orders from the New York or London office. CENTRAL BUYING POINTS. The description of the operation of the Waco House in a circumscribed Texas territory, prescribes its operation as an Intermediary Buyer, also as an Exporter and Mill Buyer. Waco being the point or base of operation, may be called MB— » 238 BUYING SPOT COTTON a Central Buying Point. Of such "points," there are many in the South; and under the present System of handling cotton, their offices are necessary for the expeditious move- ment of cotton towards consumption. What is said of the Waco House as a factor in accumulat- ing cotton coming into its control, may be said of all similar concerns operating in the South, having their bases of operation at diiferent places. There are such Houses at San Antonio, Austin, Galveston, Houston, Fort Worth, Dallas, Texarkana, Pine Bluff, Little Rock, Memphis, Natchez, Vicksburg, New Orleans, Mobile, Montgomery, Macon, Atlanta, Savannah, Augusta, Norfolk, Greenville, and many other cities. The way these Central Buying Points accept cotton from the Growers and receive and distribute it to Consumers, covers in the main, the System of moving the American cot- ton crops into the Markets of the world. COTTON GUARANTEES. Cotton is bought with and without guarantees affecting the transaction. Cotton taken from the Growers needs no guarantee, as the Buyers have the privilege of seeing and examining the bales before purchase, taking it just as their judgment guides them, and just as they find it. Cotton sold to be delivered as it exists, or in the vernacu- lar of the Trade, "as it runs," requires no guarantee further than the specific number of bales sold. That is, if 100 bales are sold, 100 bales must be delivered. Cotton bought at one point to be delivered at some other, where the Buyer does not take up the cotton at place of purchase, must be accompanied by a guarantee protecting the purchaser as to the quality and weights, unless the Buyer accepts the Seller's weights and Grades. This feature of handling cotton is an important one, and inflicts no injustice on any Dealer, but protects the pur- BUYING SPOT COTTON 239 chaser against any designing or fraudulent transactions that may be attempted by unscrupulous Vendors. The reader should remember that there are two sides to every cotton transaction, and while a Vendor may and does guarantee the cotton he sells, it does not always follow that the purchaser at some distant point where the cotton is received is an honest man, and treats him fairly in grad- ing the cotton received; and if fair gradation is not made, the Seller loses by guaranteeing his sale of cotton to such a person. Classification can be made on a list of cotton with ap- parent honesty, yet, while no deception is practiced, the results of such classification, if not correct, may react to the financial loss of the Vendor.^^ Some Buyers do not recognize the Quarter Grades, ac- cepting every Grade received as clear-cut Middling, Strict Middling, etc., and if it is not such it is reduced to the! Half Grades below. A Vendor taking up a list of cotton and recognizing the Quarter Grades, shipping the same under a guarantee to some other Buyer who does not, will have a loss inflicted upon himself. SELLING AND BUYING BY SAMPLE. Growers and beginners who aSfe not familar with Cotton Grading sometimes sell their products or purchases by forwarding samples of their cotton to Buyers, who purchase it on these samples, with the stipulation that the cotton sold must equal in Grade the samples submitted. If sold on such terms, the gradation is guaranteed by agreement ; that is, the Buyer agrees to accept, if the Seller agrees to make good any deficiencies. Selling by sample is often resorted to in making sales of Low Grade, Tinges, Stains, Sea Island, or any character of 22See "A Trade in Quarter Grades Exeinpli&ed," Appendix. 240 BUYING SPOT COTTON irregular cottons or staples, the classification of which is considered questionable by the Seller. If such cotton is sold in this manner, the Seller must guarantee the cotton on delivery to show to be the same in character as that exhibited by the samples. P. 0. B. COTTON TRANSACTIONS. Cotton sold "free on board" has reference to its delivery. It may be sold F. 0. B. at point of purchase, or at point of destination. The stipulations covering these require- ments are stated at the time the transactions are made. Where sale is made F. 0. B. at loading point and the purchaser accepts the gradation and weights at such place, no guarantee follows; but if the sale is subject to destina- tion weights and Grades, and payment made before delivery, the shipment must be guaranteed. Sales of F. 0. B. cotton are sometimes made, not only with a guarantee protecting its quality and weight at the Ports, but the same guarantee holds good for delivery at Foreign destination, or at the American Mills. Cotton sold on F. 0. B. terms may be sold by Sample, Class Marks, Basis, Average or Even-running. Prices offered for F. 0. B. cotton at buying points do not include Freight and IJrayage, but if destination terms apply, it is usual to deduct the Freight and Drayage from the Invoice. The price of F. 0. B, cotton compressed in transit is not affected by the expense of compression. The time of delivery of shipments of F. O. B. cotton is an important factor for consideration, a factor coming within the purview of 'the guarantee as a component part of the Contract. Stipulations and requirements governing F. 0. B. trans- BUYING SPOT COTTON 241 actions are not the same in all the Southern Markets, but nearly so. In the main, such transactions are governed by the Cot- ton Exchanges in the territory in which the Dealers are operating. Most of the Cotton Exchanges have Rules defining how such transactions shall be conducted, and Dealers who are members are required to conform to them, and in turn, state to others with whom they deal how they care for such form of business. There is a general similarity existing among all of them, however, as to the mode of procedure ; that is to say. Dealers handling F. O. B. cotton in Texas, do so practically the same as those operating in Georgia, the Carolinas, Mississip- pi, Arkansas, or any of the Southern States, barring small differences. SECTION IV. MILL BUYING — NORTHERN. Northern Mills do not require Sellers to Hedge the sales made to them, but instead, rely upon the responsibility of the Sellers to make good their deliveries promised in the sale. Mills wishing to exercise their own prerogatives may or may not Hedge their transactions. This is a matter of their own business judgment — a proposition separate and apart from that of the customers from whom they purchase cotton. Mills generally demand even-running Grades, and this re- quirement is becoming more general in practice. Where deliveries show to be more than one-half in quality below the specified Grade, the whole is subject to rejection ; but if less than one-half, that amount "off" in quality will be re- jected. Purchases calling for average Grades, or specific Types, may "contain 5% half a Grade below the lowest Grade spec- BUYING SPOT COTTON BUYING SPOT COTTON 243 ified if offset by an equal number of bales half a Grade above the highest Grade specified." This is a narrow range, but it is the Rule, and under it the interpretation is, assuming a Middling purchase to be made, if 5 % of Strict Low Middlings are admitted, 5% of Strict Middling will be required to off- set them— a 5% loss in "off" Grade must be compensated for in an equal percentage of Premium Grades. Mill purchases are made froni Cotton Brokers who repre- sent any number of Cotton Merchants handling Spot Cot- ton in the South in large quantities of mixed lots, from which are made separate lists of even-running Grades to go out to the Mills. It is not unusual for a Cotton Merchant in the South with good lists of cotton on hand to have it listed with several different Eastern Brokers at the same time, who are located in the vicinity of the Mill or Mills. This condition is not without its faults to the Mills, but may operate advantageously to the owner of the catton. Let it fee stated that a Mill is in the Market for 1000 bales of cotton of a certain Grade, and a Merchant in the South has this class of cotton listed with, say, a dozen Brokers in Boston or adjacent points. If negotiations are begun by the Mill for this cotton, these Brokers would be telegraphing simultaneously for it, creating in the mind of the Southern Merchant an active demand, and a tendency not only to firm the price, but to increase it. This is some- what overcome by the Mill's buying from the Broker who offers the cheapest price for the lot. Local Brokers or their representatives are frequent vis- itors to the Treasurers' offices of Mills seeking purchasers for cotton for their Southern clients, and through personal interviews. Mills have opportunities offered to them for selection of the character of cotton wanted. As stated, the Mills look to the Broker as the responsible party, and he in turn relies on the owner and Shipper for 244 BUYING SPOT COTTON protection and delivery of the cotton, according to the terms of the sale. The Mills require from the Broker a straight Sales Note, made on his own behalf and not on that of the Merchant or owner of the cotton. Owing to the delays and difficulties connected with the purchase of cotton from Shippers at a distance, Northern Manufacturers of cotton have practically abandoned the direct purchase of cotton through any channels save that open to them by local responsible parties. There are different methods of buying cotton. Pur- chases are generally under C. & F. (Cost and Freight) terms, and sometimes under C. I. & F. (Cost, Insurance and Freight) stipulations, with Weights, Grades and Staple guaranteed. "All Short Staple Cotton from Texas, Arkansas and Mis- sissippi, (except the Upland portion) and from New Or- leans, Memphis and St. Louis Markets is sold on basis of 53,000 pounds for each 100 bales; that from Oklahoma, North Carolina, South Carolina, Georgia, Alabama, Tenn- essee and the Upland portion of Mississippi, is sold on basis of 50,000 pounds for each 100 bales, with a variation of 5% either way, in each case." Long Staple cotton is accepted on basis of 53,000 pounds for each 100 bales, with 5% variation either way. The allowance for Tare is a specific average of 24 pounds per bale. All cotton less than 1^/^ inch in length is known as Short Staple, while that of 1% inch or more is termed Long Staple. Sellers delivering cotton not up to contract in Weight, Grade or Staple, must "make good" as prescribed by the Rules covering such matters. Differences between Grades are fixed by the Eastern As- sociation on the "third Thursdays of September, November and February" annually, based on the average differences BUYING SPOT COTTON 240 ; o o ^ n O hj 1-i- a. o p h* O W P Q > i" n r |W 3 ^ ^ H ^ o tro) n 3 ^ O fti g H H g P ■n O c: • 'J 3 ^ :r o ^ i=d rt > o TO g o Q q ■r 3 246 BUYING SPOT COTTON in New York, New Orleans, Memphis and Augusta Cotton Exchanges applying at the time. The United States Government Standards have been adopted and used.^* Controversies arising over settlement between Buyer and Seller are settled by agreement between the parties where such can be accomplished, but if not, the subject becomes one of Arbitration, through which medium final adjust- ment is made. Sea Island cotton is bought on Type Samples, usually, and disputes on settlements arise when some of the bales delivered show to be "off staple" from the Type Samples submitted at time of purchase. Note. — Beyond the rules of "Buying and Selling American cotton," there is no fixed and hard Eule to govern Northern Mills in every detail of their purchases, which fact gives latitude to them to exer- cise individual policies in many instances, and while the foregoing statement of Northern Mill Buying expresses in the main their plan of procedure, it should be remembered that variations from it vyill sometimes confront the Dealer in selling, but not a variation that will conflict with the Rules of the members. MILL BUYING — SOUTHERN. Note. — The following statements refer to the subject of Mill Buying, looking at the question from the Mill's standpoint. Nearly all Cotton Mills in the United States operate under associate agreements. The Southern Mills are members of Southern Associa- tions, while those of the North and East belong to Cotton Manufacturing Associations of their respective districts. All the Associations have Rules prescribing their manner 2,CO O ."2 >. 'Si u «J s; c-t: o ^ ^ o Oh j,U < o 1 :; k^ g -a-S o Si; 2 O H 22 H O o 2 u v^ !>■« « ■H.& w J o 3-S ~" t-r P^ bO^ J C 4^ « o Q "5 1- ■ — c/l o > O ^■2 t. iy 1- r !> •^s t3 u 382 COTTON EXCHANGES AND HISTORY OF COTTON Indian predecessor. Practical tests were made of it in 1772, but successful results from it are not recorded. Kinsey Burden, of South Carolina, made a novel and curi- ous Roller Gin of "two old gun barrels fastened on rollers," but the success obtained by it is not mentioned. He intro- duced it in 1777. Dr. Joseph Eve of. Augusta, Ga., in 1790 introduced a greatly "improved gin," so constructed as to be adapted for either horse or water power. A Mr. Pottle, also a resident of Georgia, made some im- provement on the Roller Gin, and his machine became popular, yet the extent of its usefulness is not known. Improved Gins of that date gave outputs ranging all the way from twenty-five to seventy pounds of cotton daily, in contrast with one to three pounds secured by hand labor. WHITNEY'S GIN — ^A TRANSFORMATION." One hundred and twenty years ago, in 1793, Eli Whitney gave an impetus to the cotton industry of the South that has moved by leaps and bounds ever since. Prior to that time the lint was taken from the seed by hand, or Roller Gins, the amount of a day's work by hand equaling one pound of clean cotton. Crude and primitive forms of machines began to appear, the best of which con- stituted a pair of rollers operated by hand, through or be- tween which the fibers were drawn, and upon the best con- structed machines, 60 to 70 pounds of lint cotton could be produced for a day's labor for one hand. The importance and value of the fiber as a material for making wearing apparel and other useful articles was well -'-;wn. yet to secure it in sufficient quantities to justify its introduction as an article of general use, was a problem to *3See Appendix. The credit given t6 Whitney as being the orig- inator of the Gin bearing his name has been disallowed by some, al- leging one Miller as being a eo-inventor with him. See also, "Saw Gin." COTTON EXCHANGES AND HISTORY OP COTTON 883 J7. ?p2ii!ne^. M/ry., Patent granted to Eli Whitney, March 14, 1794, it being the first patent ever issued for ii gin, and was signed by George Waslnngton, President, Edmund Randolph, Secretary of State, and Wta. Bradford, Attorney General of the United States. 384 COTTON EXCHANGES A^fD HISTORY 0*" COTTON' solve, due to the fact of the heavy expense attached to its production in sufficient quantity. The primitive method of obtaining a sufficient amount of clean cotton, practically precluded its general usefulness, during which time, its culture was not extensively fostered, until the Roller Gin made its advent, after which a little life and stimulus was given to the industry. The announcement that a machine had been invented by Whitney that would take from the seed 600 to 900 pounds of lint cotton in one day, while wished and hoped for, was thought to be incredible, but a confirmation of the fact was joyously hailed as a beneficent innovation. The original Gin, as devised and patented by Eli Whitney, March 14th, 1794, consisted of a roller into which short, sharp, metalic hooks or teeth were fastened in longitudinal rows, and also in direct lines following each other around it; in this' way forming a cylinder almost covered with small, regularly arranged, crooked teeth. On another shaft, lying parallel with it, carrying cross arms, to the ends of which, stiff bristles were attached, so arranged in a suita- ble frame as to revolve while in action in opposite direction to the roller carrying the crooked teeth; yet the line of travel of the circumference of the brush was with that of the movement of the receding bent spikes on the roller. In the frame between the roller and brush, metal wires or strips intervened, separated from each other by suffi- cient width to allow the free passage of the hooks on the roller, but not wide enough to permit the passage of cotton seed. Above the spiked roller was arranged a longitudinal hop- per into which seed cotton was placed for seed separation. The operation of the machine consisted in turning the roller shaft by a hand crank, the shaft being connected by a belt to a pulley on the end of the brush which was revolved at COTTOK EXCHANGES AND HISTORY OF COTTON 3 85;, a greater speed, causing the bristles to brush away the cot" ton fibers from the bent teeth as they constantly brought more cotton f ronl the hopper. The movement of the roller in Whitney's Gin caused the seed cotton to turn over in a reverse direction, producing a "Roll" as may be seen today in all "Gin Stands" of the saw type. What was termed a "Hopper" in Whitney's Gin, 'is now recognized as a "Gin Breast." The mechanical construction of the "saw" as devised by Whitney in its application to cotton for separating the lint from the seed, has remained practically as he devised it. From the day of its introduction to the world to this time, "gin saws" have continued to pull, break and tear from the seed practically 99 per cent of the world's crop of cotton. At the time of the advent of the saw gin, the production of the United States, was in round numbers, about 35,000 bales, of 225 pounds weight to the bale. The condition of the South then in trying to develop the culture of the cotton plant, may be well expressed in an opinion given by Judge Johnson, of South Carolina, in a "Suit brought by Whitney and Miller to recover from the State $50,000 appropriated by the Legislature for the pur- chase of the right to use the gin in the State." In giving his opinion, he said in part: "The whole interior of the Southern States was languishing, and its inhabitants emi- grating for want of some object to engage their attention and employ their industry, when the invention of his ma- chine at once opened views to them, which set the whole country in motion. From childhood to age it has presented to us a lucrative emplosonent. Individuals who were de- pressed with poverty and sunk in idleness have suddenly risen in wealth and respectibility. Our debts have been paid, our capital has increased, and our lands have trebled in value. We can not express the weight of obligation which 386 COTTON EXCHANGES AND HISTORY OF COTTON the country owes to this invention ; the extent of it can not be seen."** What that Judge -said then, is applicable now; "The ex- tent can not be seen." From an annual crop of 35,000 bales then to that of 15,000,000 for the United States now, states the immense increase in 120 years that has resulted from Whitney's invention. From a commodity practically unknown as of financial importance 120 years ago, cotton has now reached to that point in commercialism which gives to it the immense value of ONE BILLION DOLLARS ANNUALLY, with an in- fluence felt around the globe, touching with more or less emphasis all the leading industries. ORIGINAL SAW GIN.*^ One Mr. Hodgen, (or Ogden) Holmes*^ of Augusta, Ga., received a patent for a Gin bearing date of May 12th, 1796, about three years after Whitney's patent, bearing like Whitney's the signature of George Washington. Holmes' invention consisted of small circular saws ar- ranged on a shaft, the teeth engaging the cotton with which they came in contact, and tearing the lint from the seed, up- on the same principle as the spikes or wire teeth devised by Whitney; otherwise, the mechanical construction of Holmes' invention was very similar to that of Whitney's. The principle involved for ginning cotton by Holmes' method being recognized by Whitney as the same utilized in his own invention, became the basis for an action in the courts resulting in much litigation, that was finally decided in Whitney's favor. This prohibited Holmes from further manufacture and sale of his "Saw Gin," but a court's de- cree did not stop the ' manufacture and sale of Saw Gins by Whitney, and others to whom he might assign the right 4«rrom "King- Cotton," p. 12. <5See Brook's "Story of Cotton," p. 97, and "Saw Gin," p. 363. *6"King- Cotton," pp. 96 anc" 97. COTTON EXCHANGES AND HISTORY OF COTTON 3 87 of SO doing. Like Banquo's Ghost, it would not down; and today, wherever cotton is grown, the whir and hum of the Gin Saw is heard. Inventors both North and South have exercised their wits to devise a better Gin than exhibited by the circular saw, but let it be said to the credit of that piece of mechan- ism, it is still in the ascendency and its utility remains su- preme. Let it be stated that up to the time of Whitney's inven- tion all Cotton Gins were of the Roller type, and with but few exceptions, were operated by hand, but almost simul- taneously with the appearance of Whitney's Gin, two others came upon the Market, one devised as stated by Holmes, the other by a Mr. Joseph Watkins." The former utilized the principle of the circular saw while the latter used a wooden cylinder into which metallic hooked spikes were fastened similar to Whitney's idea. Principle.— As previously stated, the principle elucidat- ed and put into practical operation by the use of the "Saw" and "Brush" for separating fibers from seed cotton as set out by Whitney in 1794, remains about the same today in the best and latest improved Saw and Brush Gins. While it may never be known who originally invented the Saw Gin, universal credit rests with Whitney, and the world bows to him as a benefactor. If "The man who causes two blades of. grass to grow where only one formerly grew" is a benefactor to his race, how much more are we indebted to the man who causes thirty-six million acres of land to be grown to cotton where ten were formally planted? This Whitney has done for the South, and what has the South done for him and his pos^ terity? Where does his monument stand and what is the epitaph thereon? *7"King Cotton," p. 96. 388 COTTON EXCHANGES AND HISTORY OF COTTON MODEKN GINS. Whitney's idea of seed separation by means of circular saws, is the basis for construction of all modern Gins oper- ating upon Short Staple or Upland cottons. Improvements have been directed toward better material for Saws,, specially designed Ribs, Breasts, Mote Boards, Brushes, Bearings and general finish. Saws. — Gin Saws are usually made in two sizes — ^ten and twelve inches in diameter, with the teeth so formed as to offer the least cutting to the fibers in order that they may be drawn from the seed with greatest length obtainable. All leading manufacturers practically make the same form of Saw. All Gin Saws break more or less fibers. Ribs. — Gin Ribs in the best improved Gins perform the same office designed for that purpose by Whitney in his original model. Each manufacturer of Gins makes a Rib of his own devising, which when arranged in phalanx form in the machine makes a series of narrow slots through which the Gin Saws pass freely, taking through the ac- cumulated lint caught upon them while the openings are not sufficiently wide to admit the passage of matured seed. In Huller Gins, devised for taking out broken bolls, hulls, sticks, trash, etc., a double row of Ribs are arranged with one row in front of the other so as to execute well the work required of them, which is a decided improvement over the Single Breast Gin, raising the quality of cotton one or two grades when Bolly, badly picked and trashy cotton are passed through. Gin Breasts. — The gin breast is the receptacle first re- ceiving the cotton and admitting it directly to the Gin Saws, and was designated by Whitney as a necessary "Hopper" for applying the cotton directly to the saws underneath. Gin breasts are so arranged for opening or closing, that cotton can be held and more thoroughly ginned. Closing the Breast holds the seed longer upon the saws; opening it al- COTTON EXCHANGES' AND HISTORY OF COTTON 389 AIR BLAST GIN. Transverse sectional view, showing relative position of Breast and Gin Saws, and the direct application of the air forcibly applied for cleaning the saws. Courtesy Lummus Cotton Gin Co., Columbus, Ga. 390 COTTON KXCHANGES AND HISTORY OF COTTON TRANSVERSE SECTIONAL VIEW OF SINGLE-RIB BRUSH GIN. Showing relative position of roll box, ginning rib, brush and mote board. Courtesy Continental Gin Co., Birmingham, Ala. COTTON EXCHANGES AND HISTORY OF COTTON 3 91 lows the seed to pass through imperfectly cleaned. To clean the seed well is an important consideration in the construc- tion of good machinery, desired by both the manufacturer and the ginner who operates it. Mote Boards. — These are specially designed parts of the Gin Stand and placed under the Gin Saws and Brush, op- erate for the purpose of throwing out motes, broken seed, leaf particles, dirt etc. Gin Brushes. — As component parts of that character of Gins utilizing Brushes, they are devices for performing two distinct offices, namely: Cleaning the Saws of fibers by direct contact of the Brushes with the teeth of the Saws, and generating rapid air currents which not only aid the removal of the cotton from the Saws, but operate to carry the cotton to the Condensers. AIR BLAST GINS. Modernized ginning is constantly under the eyes of all leading Gin manufacturers, and in their active competition for business, nothing is offered by them to the Trade that does not have the stamp of actual test back of it. A physi- cal demonstration of every new device offered receives their attention first, and if practical experience shows it to be meritorious it is offered to the public. Actual tests made with the Gin Brush demonstrated the fact that the air currents generated by it cleaned the Saws of their accumulated cotton to some extent when the bristles did not touch them. Following this discovery, the Air Blast Gin was constructed. In this Gin no Brush is used, but instead, through a spe- cially designed frame, air currents of great force are so applied as to be directed in line with the receding Saw teeth taking the lint from them and carrying it by a continuous flow to the Condenser. The merits claimed for it are that lighter draft is neces- sary to run the Gin and a better sample of cotton is made. 392 COTTON EXCHANGES AND HISTORY OF COTTON GIN ACCESSORIES, Connected with mddern ginneries, some or all of the fol- lowing accessories are found: Elevators, Cleaners, Dis- tributers, Feeders and. Condensers, each performing a spe- cific work for a special purpose, as an economical measure for handling the seed cotton from the wagon to the bale. Elevators. — In the construction and introduction of mod- ern labor saving machinery, none has met with a greater welcome from the Southern Cotton Growers than the pres- ent pneumatic elevator system installed for taking cotton from their wagons rapidly and delivering it to the Gin Stands, with strong air currents. Pneumatic Elevators, usually constructed of heavy sheet metal in tubular form, from ten to twelve inches in diame- ter, are so arranged and connected as to allow a telescopic part to hang from outside of the building, which part may be raised or lowered as desired. Further necessary connections deliver the cotton to the Cleaners, Distributers, or to any stall or place arranged to receive it. Properly connected Fans or Blowers supply the suction for drawing the air through the Elevators. Cleaners. — Specially devised machinery for stirring or agitating the cotton while being relieved of a large percent- age of foreign substances. After cleaning, it is usually deliverd directly to the Distributer. For handling dirty, trashy or Bolly cotton, they are indispensible for obtaining the best Grade that can be secured from it. Not all ginneries are equipped with Cleaners, or Sepa- rators, as they are sometimes called. Distributers. — Receptacles into which the cotton is first drawn on its passage from the wagon or storage bin to the Gin Stands. Through their operation cotton is distributed to all Gin Stands with accuracy and in quantities to accom- modate the capacity of each. Feeders. — Above, and attached to each Gin Stand, the COTTON EXCHANGES AND HISTORY OF COTTON S98 (Feeders perform their work. They receive the cotton di- rectly from the Distributers and "feed" it regularly to each Gin Stand. Condensers. — As a component part of present day meth- ods for better ginning, the installation of Condensers, which dispense with the old-time "lint room," is an innovation in the line of improvement. Ginned cotton escaping from the Gin Stands, passing through specially devised shutes or large zinc pipes, passes on to the Condenser, which is com- posed of one or two large drums of wire net construction, through whose meshes the air passes freely, but the cotton, not being able to go through, is forced between them by the turning of the drums, coming out in "bats" of more or less thickness and falling directly into the Press. Bales so formed can be sampled with greater ease than those made by one or two men tramping cotton into the Press box, as formerly practiced in the early days of gin- ning. General Remarks. — The tendency to increase Gin capaci- ties to secure a greater output at local points has induced the erection of ginneries containing from four to ten Gin Stands each, usually arranged in batteries of two to five Gin Stands on opposite sides of the same room suitably arranged or constructed to receive them. All modern accessories for Ibetter and more rapid ginning, and all conveniences the public might demand, are introduced by many of the larg- est Southern ginners. In comparison of the results obtained from ginning cot- ton on a Roller and Saw Gin, evidence shows that both break fibers in the same proportion, but cotton from a Roller Gin shows the fibers are more curled and twisted, which has a tendency to cause the formation of "naps," especially noticeable when this cotton is put in the Carding Machines. ' Cleaner cottpn is credited to the Saw Gins, because they 394 COTTON EXCHANGES AND HISTORY OP COTTON are specially devised with other apparatus connected with their operation for taking out the excess trash. A curved saw tooth round and smooth, so made as to strike the fibers at right angles, will not injure dry cotton if the saws are not run at too great speed. Most cotton ginned in America is passed through "cus- tom ginneries" whose owners usually charge so much per bale for cotton "ginned and wrapped," and whose personal gains are determined by the number of bales ginned, thus gauging their revenue; and it too frequently happens, es- pecially during the rush of the ginning season, that gin saws are run at too great a speed ; resulting in a compara- tive loss on the cotton ginned, by reason of unduly breaking the fibers. During such times a Roller Gin would be equal- ly hurried, and the results obtained would be just as bad. COTTON PRESSES — ^BALING. The problem of marketing cotton, after its merits be- came known as an excellent substance for the manufacture of wearing apparel and other articles, was a hard one to solve by the agriculturist. Cotton production was comparatively new. Two factors had to be considered in any effort to find a solution of the situation that would give profitable returns to thie Grower. First, owing to the nature of cotton, some form of re- ceptacle or package was needed for its safe transportation ; second, the South had to look for a Market in foreign coun- tries, from which she was separated by a great ocean with transportation facilities for crossing meagre and slow. In the first efforts at transportation, cotton was sent to England for a "trial market," in sacks of '200 to 300 pounds weight, and for a series of years from 1790 to 1810, the en- tire amount of American cotton transported was shipped in that form. The demand by the maritime vessels for a smaller package of greater density, for the economy of COTTON EXCHANGES AND HISTORY OF COTTON 3 95 space, gave cause for the creation of some form of Press that would put a greater quantity of cotton in a smaller package than could be packed into a sack by the weight of a man tramping it therein. The Wooden Screw Press. — Practical tests based upon repeated trials for a series of years, had demonstrated the fact that the buoyancy of cotton was hard to overcome when confined in bulk and any Press that might be made to con- fine it in a dense and compact form would have to be con- structed of strong material, and believing the power for doing this to be obtained through the mechanical principle of the screw as the proper one,'«o the Wooden Screw Press was devised. It was built of heavy hewn timbers, four of which stood upright on appropriate base sills of other equally as heavy material. Between the four uprights, a large box was built and attached, sufficient in size to hold a 500-pound bale of lint cottbn, tramped as tightly as two men could pack it by their weight. Two long arms of 40 or 50 feet in length, of hewn or round timbers, serving as levers, were attached to the top of the large wooden screw and spread as an inverted V towards the ground. The large screw was carried up or down through heavy bolted tim- bers, confined between four uprights, as if working through an immovable nut, which bolted timbers were bored and threaded to suit the threads on the wooden screw.* To the ends of the levers near the ground, mules were hitched for finally forcing the screw down to the point of bale completion. At time of beginning the pressure for a bale, gravity act- ing on the massive screw with its lever attachments, often reduced the bale to half completion without the necessity for the application of any other force, and here it was thought that both time and money were saved by the ex- ertion of such a latent force doing half the work, and de- void of any expense beyond the wear upon the machinery, *See cut, page 1. 396 COTTON EXCHANGES AND HISTORY . OP COTTON but subsequent inventions of better and more economical Presses have proven the falsity of such coijclusions. This form of Press made a square bale, pressed to a density of about 8 pounds per cubic foot, which was cov- ered with jute or hemp bagging and bound with ropes. In order to avoid the initial expense of erecting a Wooden Screw Press, different mechanical devices involving the principles of the lever, the pulley and the wedge, have en- gaged the attention of inventors at different times, and Presses of various types have resulted, some possessing de- grees of merit, and many put into practical operation, all of which have finally given away to the Screw, Hydraulic and Steam power. About the year 1870 the metallic screw was utilized, and ^bon displaced the heavy, clumsy wooden one for actual service, in connection with a better devised press box. The advent of the small metallic Screw, (5 to 7 inches in diameter), as a convenient and cheap means of applying the requisite power for making a bale of cotton gave a new impetus to cotton culture. , Gonteniporaneously with it appeared the Hydraulic Pj-^SS, each of which formed a bale pressed to a density of approximately 12 pounds to the cubic foot. The metallic Screw, Hydraulic Power, and the energy of Steam are the agencies now employed for reducing cotton lint to cotton bales. The Screw and Hydraulic Presses, are most in use at the present time. For the "man in the Press," the Steam Packer has been substituted, to the advantage of both the cotton and the Ginner. By its use, the cotton is packed just as evenly as the bats of cotton from the Condenser fall into the Press. Modem Presses are made in both single and double-box styles, usually equipped or built as self-packeris. The Double Box Press is attached to a metallic central upright, about which it revolves. Such Presses are installed to ac- commodate a double battery of Gins, or several Gins in one COTTON EXCHANGES AND HISTORY OP COTTON 39;'^ building. In a ginnery so arranged, no necessity arises to stop the movement of any of the machinery, as a complied bale is "tied out" of one box, while cotton continues to flow uninterruptedly into the other. COTTON COMPRESSES. Continued requests for smaller packages of greater den- sity by vessel owners transporting cotton to foreign Ports stimulated inventive genius for many years in efforts to perfect such a package to the last degree. Tramping cotton in sacks of 200 to 300 pounds weight for export compressed it to 5 pounds per cubic foot; the Wood Screw Press condensed it to 8 pounds; the metallic Screw or Hydraulic Presses of today press it to a density of 12 pounds in the original bale at the ginneries. The powerful Compresses not unusually exert a pressure of 50 to 60 pounds while the bale is under the Press, but when released and re-expanded, a density of about 221/^ pounds per cubic foot is registered. The records show that but few bales "dock" at Liverpool with a greater density than 20 pounds per cubic foot, owing to expansion of the bale when released from the Press and the jnability of the ties to maintain its density. In 1832 a Compress was built in New Orleans, known as the "Levee Cotton Compress," the erection of which cost a half million dollars with capacity of 200,000 bales per annum. The Orleans Cotton Conjpress, with an annual capacity of 150,000 bales, erected at a cost of $754,000, with warehouse facilities for storing 25,000 bales, was completed in 1835. The Tyler Hydraulic Compress was introduced in 1845. In 1851, ten Tyler and two Duval Compresses were in op- eration in Savannah, Ga., the capacity of all aggregating 7,000 bales per day, or 168,000 per month. At the same time there were "42 warehouses, covering 40 acres of ground and capable of storing 310,000 bales of cotton." 398 COTTON KXCHANGKS AND HISTORY OF COTTON .\U N(il-.k'> i,INM;k'.> CO-MI UHSS. llniM.l i.i !if liivl.Lli'-.l ai 'iinncrir-i. (See i-. 400. COTTON EXCHANGES AND HISTORY OP COTTON 399 noL'nLi-: lujx sckew puf.ss Devised to .■LrcoiiMr,,.,lriu- iwo iMtterlts of Gin Stands. (See ji. 396.) 400 COTTON EXCHANGES AND HISTORY OP COTTON The compression of cotton at a comparatively early date of its culture went far towards answering the demand for a condensed package. The immense outlay to erect such plants narrowed their contruction to the efforts of a limited few who, practically having a monoproly of the industry, were reaping thei, exclusive revenue arising from them. This led to other thoughts, and a different IjEhe of endeavor. In- ventive genius being again called into , sfction, directed its ingenuity toward perfecting a Press that would condense or compress a bale of cotton to the necessary. ,d,etts.i1;y re- quired by the transportation eonlpanies and perfect and install it at the ginneries, which has resulted in the creation of the Hunger Ginners Compress, the American Round Bale, and the Lowry Round Bale Presses. Hunger's Ginners Compress. — This Compress is of the revolving double-box press type, constructed sufficiently strong to withstand the strain required of it, and produces a compressed bale at the ginnery having a density of some- thing more than 30 pounds of cotton per cubic foot. Only eight ties are required to retain the integrity of this bale. The bale is made of several layers of cotton, and is final- ly completed by direct action of the hydraulic ram slowly compressing it to the density required. Slow compression allows the gradual escapement of air, which finally being expelled and the fibers brought into rigid contact with each other, completes the bale. It is claimed no injury results to the cotton fibers sub- jected to this Jieavy pressure. The American Round Bale^^ — The theory of making a round bale for preparing cotton for Market is quite an old one. Patents were issued to Mead in 1847, and to North in 1848, for machines to make this type of bale ; but not until the improvements made by Bessonette (of Temple, Texas) in 1893 in his machine, was any progress made toward in- troducing such a Press into practical operation. With some *sSee Eoiind Bale, Book III, p. 252. c6tT0N exchanges and history of COTTOlsr 401 improvements on this style of machine, it is the present form of Press iiow manufactured, sold and Used by the American Cotton Comp&ny. ' The bale is made by winding the cotton on a central core for a beginning, after which the bat is gradually wouiid around in one continuous manner until the bale is corii- plelied to 25 or more inches in diameter. The bale is formed between rollers that constantly press agaipst the cotton, and excludes the air from the cotton as the, bale gradually increases in diameter, virtually elimi- nating any tendency for the cotton to . expand after the \)ale is made, which obviates the necessity for the use of apy ties to hold it in its original form. After completion, the bale is wrapped with a hemp or duck material, and end pieces sewed on, which makes a gpmplete covering a,nd protects the cotton well from gin to factory, as this covering is never cut for the purpose of sampling the bale. . . . American Round Bales are usually compressed to an av- erage of 33 pounds per cubic foot. '■■ The absence of ties and the use of a light weight cov^ ering*^ subjects the bale to a tare of only one per cent; Samples are drawn from the bale when half completed, and are relied upon to represent the cotton after comple- tion of the bale intended in this way to give the true quali- ty of the cotton. Each sample bears the same number and registration as that given the bale from which it is taken. Lowry Round Bale. — As a Round Bale of different con- struction, the Lowry Bale soon followed the Bessonette into public notice. This bale was formed inside a metallic cyl- inder, built up so to speak, in spiral layers from the bottom. *8The covering on the American Eound Bale weighs 2J lbs., costing about 20 to 25 cents. Two Round Bales weigh 500 lbs., wrapped with a covering of 5 lbs., worth 40 to 50 cents. The American Square Bale has 27 to 30 lbs. on it after leaving the compress. Exclusive of the Patch, the original cost is practically $1.00 a bale for bagging and ties. 402 COTTON EXCHANGES AND HISTORY OP COTTON The metallic cylinder prevented lateral expansion while con>- pression was given perpendicularly as the bale was formed. As this bale is practically out of use and almost obsolete, further description of it is unnecessary. It was generally reduced to a density of about 50 pounds to the cubic foot, while in some instances in making demonstration tests, 86 pounds were recorded. An idea of such a density may be understood when it is stated that oak possesses a density of 54 pounds. Shipment of Compressed Cotton. — ^The advantages to be gained by shipment of compressed cotton may be well illus- trated by comparison. The modem bale as it comes from the ginnery is of such a size that 25 of them fill an average size box car, while two and a half times as many bales from the ordinary compress can be stowed in the same space. The Hunger Gin compressed bale is so uniform and is reduced to such a density, that 140 to 170 are placed in the same size car. The American Round Bale being approximately the same in density as that from the Munger Compress, can be stow- ed in the same place, that is to say 150 to 175 of them can be placed in a car that would accommodate only 25 un- compressed bales. The percentage of loss in space for transporting round and compressed square bales is slight, although it is alleg- ed by some that the loss is greater with the round bale. REVIEW QUESTIONS REVIEW QUESTIONS SECTION I. WShat a,re the causes for changes in the appearance of open cotton in the field? Do these changes create different qualities of cotton? What are these qualities called? Why the necessity for naming these differient qualities? How are the discolored cottons designated? What terms are used for this purpose? What are the tri-foliate "forms" called that envelope a boll of cotton? Do parts of these "forms" ever become mixed with the seed cotton when it is gathered? Do they aSect gradation? liito how many parts are cotton bolls divided? How many seed are usually found in each section or "lock" of cotton? Do these locks ever become mixed with dry, dead leavee or "squares?" Do they ever fall from the bolls, lodge on the limbs of the plant, or drop to the ground? What is the result of such action on the appearance of the cotton, and what does it cause? What result is shown on cotton if ginned damp or wet? In what other way may "gin cut" cotton be produced? Can wet cotton be as well cleaned as dry cotton? Why not? Do fibers of damp cotton adhere more closely to trash and dirt than dry ones? If too much dampness occurs, what result is shown on the ginned cotton? Do "naps" affect gradation? Wlhat are the causes for, and what produces, "gin falls?" To what extent do they affect g^radation? REVIEW QUESTIONS. Into how many parts are the names of the qualities divided? 'What are the three parts called? How many Full Grades? How many Half Grades? HoS* many Quarter Grades? Can the Full Grades be clearly defined? Why are the terms "Strict, "Fully" and "Barely" used? 406 REVIEW QUESTIONS What is Fully and Barely Middling? What is the difference between Tinge and Stain? Which of the two is lightest in shade of color? Can the line of distinction between them be clearly defined? Are other colors ever imparted to cotton besides the reddish color- ings distinguishing them as Tinges or Stains? How many Grades and subdivisions of cotton are recognized by the Xew York Cotton Exchange as white cotton? How many Tinges and Stains? What Grades of cotton accepted by the Trade not recognized by the Cotton Exchanges? What are the highest and lowest Grades of Tinges and Stains? BEVIEW QiUESTIONS. At what season of the year are the best or Higher Grades of cotton generally found? What are the influences affecting the physical qualities of cotton? Is there any definite mechanical rule by which cotton can be graded or classed mathematically correct? What guides a Classer in his capacity to technically determine a Grade of cotton? Do all Classers have a matured idea of what constitutes a Grade of cotton? What are the causes for different opinions among Classers respecting the Grades of cotton? When two Grades of cotton approach each other in all respects closely, how are they Graded? In the main, is there a general agreement between Classers as to what constitutes a Grade of cotton? Can Classers familiar with Texas cottons, easily Grade the cottons of the Carolinas or Georgia? Why not? What is the specific duty of a Classer? Do Classers always agree with each other in taking up a list of cot- ton, or with themselves in a second classification? Why is it their opinions do not always coincide? What are the substances affecting gradation, or for what must the Classer look to determine a Grade? Why should cotton not be gathered damp, or if damp, why the necessity for drying it before ginning? What sometimes causes damp or "wet pack" bales, when dry cotton has passed through the gin stands? What are some of the causes for "two-sided" bales of cotton? How should a bale of cotton be cut and a sample drawn to get the best results respecting the true character of the cotton in the bale? REVIEW QUESTIONS 407 REVIEW QUESTIONS. How many grades in the Government's Official List? Should a full list of the Commercial Grades be had to classify all of them? Should the student have an opportunity -to hold the samples, and ^in some knowledge of them by the touch, in connection with their visual appearance? Can written or printed description teach the art of cotton gfrading successfully witKout a physical examination of the cotton? Is a knowledge of both necessary to the operation of a successful cotton business? Why are the Types of cotton repeatedly used, called the "Working Types?" Is there any definite rule for displaying samples for gradation work? (No.) How should a sample be handled to show the character of the cotton to best advantage? Should a sample be torn in two in an attempt to grade it? In what form are samples best preserved? For what purpose should a sample of cotton be torn in two? Should reference be had to the Government's types, and why, in the study of gradation work? What is one of the most important factors in determining the Grade of a sample of cotton? How should side, or over-head lights be regpulated? How should the Classer stand in a side-light to get best results in classing a sample? How should classification be performed in the open air or in the sun light? Can anyone class well in the open air who is accustomed to per- forming such work in a room with side, or over-head lights? In active, practical work, does a Classer stop to think each time he examines a sample, how much of this or that substance aifects it to make it a "Grade?" What is generally the result of the first impression made by a Classer in passing upon a sample? With what rapidity does an experienced Classer grade cotton? REVIEW QUESTIONS. Could a Low Grade of cotton be brought to a Higher one by taking out the foreign substances, if the fiber is not faulty nor other im- perfections appear? In the Table, under the heading "Look For," why do the Grades be- come lower in quality as the scale of the Table descends? What can you say of Inferior cotton? 408 REVIEW QUESTIONS Define Low Ordinary, Ordinary, Strict Ordinary, Good Ordinary, Strict Good Ordinary, Low Middling, Strict Low Middling, Middling, Strict Middling, Good Middling, Strict Good Middling, Middling Fair, Strict Middling Fair, Fair. How are the Tinges and Stains classified ? \^^lat are the differences in grading Tinges, Stains and white cotton? Can anyone class Tinges and Stains without a knowledge of the gradation of white cotton? Are the Premiums and Discounts for the Higher and Lower Grades constant? Why do) they vary at different times? ^ATiat valuation is given to the Good Middling Tinged Grade by the New York Cotton Exchange? What is meant by the terms "Fully" and "Barely" with reference to cotton Grades, and what other names are sometimes given to them? What is meant by the words "sliy" and "full" in connection with cotton grading? WTiat is the policy of cotton Buyers or Mills with reference to class- ing the shy and full style Grades of cotton? W!hat is Bolly Cotton, where did it originate, how is it secured, and what are the peculiar features causing it to differ from other cotton? Are its fibers always matured, if not is its value impaired? ^Tiat can you say about all Bolly Cotton being Tinged or Stained? Can it be delivered on any Contract made on the New York or New Orleans Cotton Exchange? How is the valuation placed upon this cotton? AVliat is Sea-Island cotton? Can you define some of its qualities and tell how it is graded ? How is Sea-Island cotton generally sold to the Trade? As a Staple what other varieties supercede it? Define Bender cotton and give some of its features as compared with Uplands, Gulf Types, Texas, Oklahoma and Sea-Island varieties. ^Miere does it grow principally and in what State did it originate? -Vs ii staple cotton, what is the prevailing length of it? What are Linters and from what source do we get them? Are Linters graded as our standard Types of cotton? How many pounds of Linters are usually obtained from a ton of cotton seed? Can Linters be delivered on any of the Cotton Exchange Contracts? What are cotton fibers? Are cotton fibers given greater tensile strength if stored with seed cotton in a suitable place for some weeks before ginning? Does protracted dry weather affect cotton fibers while the plant is growing? Answer : (Yes.) REVIEW QUESTIONS 4Q? REVIEW QUESTIONS. WTiat is necessary to be used to guide the student in cotton class- ification? How many Full and Half Grades constitiite the Government's Official List? Name those Grades. What was conceived by the Government in establishing these nine Grades? How many samples of each Grade are in one box? Of what is each sample a representative, in the box? Why were twelve samples placed in each box? ^Vhy are instructions given that these famples be not touched or handled? Under what guidance do our cotton crops pass into the channels of Trade? ' Do the Standard Types of cotton adopted by the Cotton Exchanges harmonize in all particulars with those of the United States Govern- ment? What are these lists called? ^Vhat do Official Lists represent? Is every crop of cotton grown always an exact counterpart of all the crops that have preceded it? Can you tell why the peculiar chaxacteristics of one crop is "creamy," and other "white," another "dingy" or faintly "smoky," yet sufficiently defined as white cotton of "good color?" Do these peculiarities change gradation? How many samples of each Grade do the Cotton Exchanges put in their sample boxes ? What is the approximate weight of each of those samples? Do all the Cotton Exchanges have the same Standards? What is the cause of this difEerence among them? Is Middling in Augusta, Savannah, New Orleans, Memphis and New York the same in quality? What can you say of the Standards in New York and New Orleans respecting their differences? What is the difference in Standards in Houston and Galveston? How do the Standards of Liverpool, Bremen and Havre compare? How do the cottons of the Carolinas, Georgia and Mississippi com- pare? Are the cottons east of the Mississippi Eiver, known as Uplands, the same as the Short Staple varieties in Oklahoma and Texas? What can you cay of Private Standards, how, and why are they used? ^Vhat are Class Marks? How do the Government Standards compare with those of Liverpool? 410 REVIEW QUESTIONS REVIEW QUESTIONS. How are commercial values of cotton measured? How are Grades determined? What are known as Grade Values, and what do they fully represent? What is meant by Stapling cotton? What is the Staple of cotton? What is meant by Staple Values of cotton, and is the length and strength of the fibers necesi=ary to be known to get at these values? Do Staple Values modify Grade Values, and vica versaf Do Grade Values show the same Premiums as Differefnces as ex- hibited in Higher Grade Staples? Are Staple Values affected by contingencies of the Market similar to Grade Values? How is Staple cotton classed? Do all Mills use the same character of cotton both as to Grade and Staple? What are the requisites necessary to supply a Mill with its needs? What is meant by selling cotton on its Merit? How can a Merit Value be two-fold? What is the average Grade and Staple used by the American Mills? Are the Premiums for the High Grade Staple different from those of High Grade Short Staple Cotton? What is meant by a weak or perished Staple? Why do Classers sometimes differ as to what constitutes a "weak" or "good" Staple? Where the fibers possess unmistakable evidence of good length and strength, is there any cause for controversy over such fact? What is meant by a "good body" of cotton and how can you deter- mine it? Are the Staple cottons grown in the lower Mississippi Valley the same as Sea-Islands in all their qualities? What are the highest types of Staple cotton grown and where principally found? What is meant by "pulling for staple?" How should a beginner in classing cotton determine the length of the fibers? How should one draw fibers to determine the Staple of the cotton? Whj' should guess work not be tolerated? What is the final destination of all cotton? Are the Mills restrictive in their demands for raw material? Can a Mill equipped for the manufacture of a specific line of goods use any Grade or Staple of cotton? What is "Even-running" cotton, and why do Mills specify such cotton when purchasing? Will Mills accept a shade of variation from a specific Grade de- manded? REVIEW QUESTIONS 411 What do they usually specify when in the Market to purchase cotton? What is meant by Spinnable Values, and how are they measured? What is meant by averaging Grades and Values? Is an average list an even-running one? Is an average list always the same, or can there be an average list of High Grades or Low ones? Why is it advantageous sometimes to average a list of cotton? What is meant by so many Points "on" or "oif" Middling? How do operators generally deal with each other in handling large lists of cotton? What is meant by a sale "hog round?" Do Dealers requiring High Grade cottons accept average lists with- out specifying "nothing below" a certain Grade? REVIEW QUESTIONS. What is meant by the expressions, "differences in Grades," and "differences in value?" Is it necessary to know the relative value of -the Higher and Lower Grades in figuring an average list of cotton? Define the meaning of Table XII. Do the Differences established by the Cotton Exchanges always conform to those accepted by the Trade? How are Grades of cotton distinguished with reference to their value? Can these Grades or Difference Values be determined by the Mill? Are Spinnable Values always in line with the Differences established by the Trade? How are the Premiums and penalties prescribed by the Trsicle and Cotton Exchanges determined? How are these arbitrary Differences made? What are the results of practical tests made by the Mills and the technical colleges in their textile departments, as to the percentage of waste in any specific class of cotton? If the percentage of waste is heavy or light, what does it indicate? Is the amount of waste in any Grade of cotton always constant? What is the approximate waste in percentage of a Middling bale of cotton? Are the Spinnable and Trade Differences the same in percentage? What would you consider the cause for these Differences? If the Spinnable Differences should ultimately apply, would there be the same need for such an extensive variety of Grades as are handled by the Trade today? 412 REVIEW QUESTIONS BEVIEVV QUESTIONS. For what purpose are abbreviations and terms used in the Ttade? For what purpose are Arbitrators necessary in adjusting differences in cotton transactions? What course may a Dealer pursue if dissatisfied with the result of an Arbitration? Are controversies ever settled without the use of Arbitration or legal procedure? What is meant by "Bear" or "Bears?" On which side of the Market do Bears operate? What is meant by the terms "Broker" or "Brokerage?" Where do we find, and who are those who operate as Brokers? What are the charges per 100 bales for buying and selling an Exchange Contract ? On what class of business do these charges apply? Do Brokers charge the same Commission for handling the business of other Brokers as they charge for non-members? On what is the Brokerage reckoned? Do Brokers deal exclusively in Future Contracts, or can they handle both Spot and Future business? Can they operate through Agents? What is meant by the terms "Bull" and "Bulls?" What is the difEerence between the operations of a "Bull" and a "Bear?" Which desires the Market to go up and which wants it to go down? Wlhen may a Bull become 3) Bear or a Bear operate as a Bull? Are all fluctuations in the Market caused by manipulation? How can the Market fluctuate without manipulation? What is meant by a Code or Cipher Code? For what purpose is it used, how does it safeguard business, and why is its usage economical? How are Codes arranged for practical usage in every day trans- actions ? What are the principal Codes generally used? What latitude of information in the Cotton Trade is covered by the Code? In brief terms, what is the Commercial News Department Code called? For what purpose is it principally used in the Trade, from and to whom are "C. N. D's." generally transmitted? . Is this Code different from the ordinary Cotton Code? What are the three principal reports from the Cotton Exchanges transmitted to the Trade everywhere? What are the principal Reports transmitted after the "close" for the day? Can the Code be used in the transmission of cablegrams as well as telegrams for domestic Markets? • REVIEW QUESTIONS 413 What do you understand to be the meaning and purport of a Con- tract issued from the Cotton Exchanges? Are Contracts ever made between Dealers in the Trade outsidel of the jurisdiction of the Cotton Exchanges? Tell what is meant by the term Discounts and how it may be ap- plied in different ways? What are Cotton Factors, what character of busiiiess is executed by them, and where do they generally operate? What is meant by "Flat Cotton?" If cotton is to be "shipped Flat" what notation should be made on the Bill-of -Lading? What is meant by "Future Sales" as applied to Cotton Exchanges? Can Future Sales be made between Dealers without buying or sell- ing a Contract on the Exchange? What do you understand by the term "Futures?" Are members of the Exchanges forced under the Rules to deliver to, or receive from, one another Spot Cotton on their Contracts, or can they settle with each other by transferring the Contracts and paying for the difEerences in value? What is meant by a "Hedge"? If a Dealer is Hedged in one month, can he transfer this Hedge to some other month? What does it cost to Hedge a Contract? What is an "Invoice" and why its necessity in a shipment of cotton? What is meant by "Long Cotton"? What is the difference between Long and "Spot Cotton"? What do you understand to be the meaning of "Margin" or "Margins"? Can you give an illustration and tell how to use it? What do you understand by the expression, "Market Opens," "Market Closes"? What is meant by "Parity"? ■W5iat do you understand to . be the meaning of, and how ' are "Premiums" used? What do you understand to be the meaning of "Premium" and "Discount Grades"? Can you tell what is meant by "Reclamations"? Define what is meant by a "Scalper" and how he operates? Define "Spot Cotton" and "Spots." Why the necessity on a Domestic or Export Bill-cif-Ladiilg for the notation, "Shippers Order, Notify"? Is it customary for Cotton Buyers to give Cotton Shippers full credit for the face value of the Draft on the cotton? Describe when it may or may not be done. ' What are "Splits"? ' ' ■ • What do you understand to be the meaning o'f "Straddles" or "Spreads"? ^ ^ ' 414 REVIEW QUESTIONS REVIEW QtJBSTIONS. How are Cotton Quotations for Spot Cotton generally given in the public press? How are the Futures quoted with reference to their Fractional denominations ? What Decimal Fraction is the limit in making cotton calculations, established by the Cotton Exchanges? What is meant by, and the value of, a Point? For convenience, how are Points generally expressed? Where Cents are connected with Points how are the quotations divided to show the value of each? How would you express and read 10 Cents and 2 Points, 12 Cente and 20 Points, 18 Cents and 75 Points, » Cents and 50 Points? What is the difference between 1/4 of a Cent and 25 Points, 3/8 of a Cent and 37J Points? What is the value of 1 Cent, 1/2, 1/4, 1/8, 1/16 and 1/32 of a Cent in Points? In working any of the given Problems where Common Fractions are connected with the price, can you convert these Common Fractions to Decimals and perform the operation of solving the Problem by that means? How would you express 8 Cents and 25 Points as a Decimal of a Dollar? Express lOf Cents, 6i Cents, 12 J Cents, 15| Cents, 9 1/16 Cents 21 Cents, 8 3/32 Cents as Decimals of a Dollar. How would you find the sum of $161 3/8, $102 1/8, $252 3/8? How far must every Decimal be carried, or how many must be pointed off, where the use of the Point is involved? How many Points are there in 121c, 8|c, 6Je, SJc? Find the difference in Points between 10 Cents and 12J Cents; be- tween 5 Cents and 15 Cents, 7J Cents and 9 Cents. What is the difference between 1/32 of a Cent and 3J Points? What part of a Cent is 7/16 of it expressed in Points? Express in Points 5/16, 3/8, 1/2, 11/16, 3/4 and 7/8 of a Cent. REVIEW QUESTIONS. Can cotton calculations for ascertaining the value of cotton, be made by starting from a certain point, and figure up or down from it? What is this point called from which the reckoning is made? Can calculations be made correctly by starting from a certain point as a Base? What are such forms of calculations called? Do Basic cotton calculations shorten the operation for maJdng them? REVIEW QUESTIONS 416 Is it material to know the numljer of Grades in making Basic cotton calculations? Why is it convenient in making such calculations to use numbers or letters to represent the Grades? Do members of the Trade use the same symbols for indicating the Grades? In working from, a Base, how are the Premiums and Discounts represented? Are Premium Values worth more, and those bearing a Discount worth less than the Basic Value? What Grade of Cotton is generally used as a Base? Do some Dealers use a different Grade from Middling on which to base their calculations? (See "Difference Sheets," Appendix p. — ) Is there always a definite amount to be discounted for Tinges and Stains, beyond what may be arbitrarily applied 7 What Grade of Tinge has a Premium over Middling? Do you remember what value is placed on Good Middling Tinged? What Grade is used everywhere as a Basic Grade? In making a calculation for getting the value of any quantity of cotton, is it necessary that the Differences up and down be the same? Why is it convenient sometimes to get the average price, before attempting to get the total value? Can you tell how to find the average price under Kule 2, First Process? Is the average price found under this Process absolutely correct? Is this Process often used by the Trade? What is the difference in finding the average price under Second Process to that found under First Process? Why is the result obtained in the Second Process not absolutely correct? Are the averages found under this Process sufficiently close for practical purposes? ■Why is it that Cotton Buyers sometimes find their classification at time of sale to be different from that when the cotton was purchased ? If several Buyers have the same Basis price but different Premiums and Discounts for the relative Grades, will that make a difference in figuring their cotton? , What is meant by the statement that B "had a quarter basis, five- eights, or one-half basis" in giving a price for cotton? What is meant by the word "Discretion" as a term applied in cotton transactions? What is meant by the sixteenth or 6} Point Process? Is this Process often used in the Trade? Tell how to use it? Why is it so often used? 416 RayjIBTW- .QUESTIONS Can the , average be found in Points . without the use of ,t>he 61 Point? ■, Explain , why Buyers sometimes speak of the . Grades as "Goods," "Stricts," "Strict Lows," "Lows ;" or as "oneSi" "twos," "threes'' and '.^fours"? ■- , ■- ' Do these same formalities obtain all over the South? REVIEW QUESTIONS. What is one of the most important factors to be considered in determining- a price to be paid for cotton? What are Domestic Freight Rates? WTiat are those Freight Eates called that apply exclusively in a State? WTiat are those called applying between States or from one State to ianother? What organization or body generally controls Intra- and Inter- State Freight Eates? 1)6 railroads have the right to establish their own Freight Rates? ■ Can they utilize their self-made Eates without the surveillance of the Railroad Commissions having jurisdiction over them? What do you understand to be Ocean or Maritime Freight Eates? Does any Commission or Organization have any jurisdiction over or supervise the Freight Eates made by Maritime transportation companies? How are they sometimes governed in certain instances? Are Maritime Freight Rates constant in application or are they subject to fluctuations? Does competition enter as a factor in directing the Freight Eates to be applied? What effect is sometim.es had on the schedule of charges where Maritime transportation companies bid against each other for traffic? Do Maritime transportation companies ever contract with Shippers for the transportation of Freight in one part of the year to be trans- ported at some subsequent time? Does the privilege of contracting the transportation of Freight open an avenue for speculation on the same? Are the Eates exhibited in the circulars or bulletins of the Maritime companies exactly the same as those made by private agreement? If an Exporter secures the minimum Freight Eates, and finds at the time of the exportation of his cotton that the Freight Rates are much higher, what is his course to pursue to realize a profit there- from ? Can or may this profit be sometimes destroyed by active competition? REVIEW QUESTIONS 417 BEVIEW QUESTIONS. Vniat is a Check or Draft? WTiitt is the material difference between the two and how do they apply? With reference to time how are Drafts made? What is a Draft sometimes called? What is meant by a Draft selling for Par, Premium or Discount? ■ySTiat do you xmderstand to be the meaning of one person dra/wmg on another? If a Draft is not paid when presented how may it be protected without being protested? ^Vhat do Drafts usually show? How^ many parties are conRected in a Draft transaction? What is a Domestic Draft, a, Foreign Draft? How are Domestic Drafts paid with reference to time? Are Drafts for Foreign accounts made payable "at sight"? What is Buying and Selling Drafts called? Who usually deal in Drafts as commodities to be bought and sold? How do banks charge or what Kate do they usually make for Buying and Selling Drafts? What do you understand to be the "Course of Exchange"? Wliat are the advantages to be had in the use of Drafts in the settlement of cotton transactions? Do they eliminate the risk of sending money? How may a Drawer of a Draft in Memphis, Tenn., for $1,000, have paid to himself this same amount of money in New York? AVhat are "Reserve Agents" or "Correspondents of a Bank"? How do banks distribute their deposits for safekeeping? For what purpose are these deposits placed in the hands of other banks? Can individuals arrange for Exchange accounts similar to banks? Can Exchange sometimes be cheapened by transmitting the Draft through two or more commercial centres? Who determines the basis for money transactions between the United States and Foreign countries? When does a Draft on any Foreign country sell for Par and what is this kind of Exchan'ge called? Why is Intrinsic Par of Exchange different from Commercial Par of Exchange? What character of Exchange for Foreign countries. Is dealt in by our banks? How is Exchange computed for England, Ireland and Scotland, and through what Foreign city are the Drafts usually drawn? How are Drafts generally drawn for payment of cotton shipped to France? Are they sometimes drawn payable through London? 418 REVIEW QUESTIONS Througrh what 'point are Drafts generally drawn for payment of cotton destined to Germany? What five Foreigfn countries have the same Monetary Unit value? THiat three have the same Monetary Unit value, but different from the five preceding ones? What countries have their Monetary Unit coinage divided into 100 parts as subdivisions? What character of Drafts are used for the payment of Foreign cotton, and for what length of time do they usually read? What are the standards of weights used throughout Foreign coun- tries? In what denomination of those measurements are cotton fibei» measured? EEVIEW QUESTIONS. Over what extent of territory do Cotton Buyers in the South operate? Why do so many people attempt to buy and sell cotton? With what must a Dealer familiarize himself to buy and sell cot- ton successfully? TMiat three classes of Buyers operate in the Market? ■RTiat must a Dealer know before he begins a day's business buy- ing cotton? Define a Local Primary Buyer, an Intermediate Buyer, an Exporter or Spinner Buyer. Can you tell how cotton Markets are made, and from vyhat source do we get our quotations on which to buy or sell? At what time of the day does the New Orleans Cotton Exchange begin its business? What is the nature of the first business transacted thereon? How many "Calls" are made during the day, and what are they? What is the character of the business transacted on the Exchange? Are trades ever made in private on the Exchange and no records kept of them? What do you understand to be "Ring Trades" or "Ring Trading"? For what purpose was the circular enclosure on the floor of the Exchange made? How are the quotations sent out from the Exchange, and to whom are tliey sent? Describe the operations of a Local Primary Buyer, an Intermediary Buyer, an Exporter or Mill Buyer. \Miat are "Cotton Limits"? Do all Local Buyers operate independently, or on salary, or on commission? Describe a representative cotton firm. REVIEW QUESTIONS 419 Bo most large Dealers in cotton possess a membership in some of the Cotton Exchanges? When, and how can a large Dealer operate in the Market i inde- pendent of Exchange quotations? How do large Dealers figfure out a "working basis"? How many months do the Exchanges quote as Future Months? Why are they quoted as "active" or "Hedging Months"? What months are generally recognized as the Hedging Months? How does Liverpool quote her Hedging Months? Describe how a Local Buyer takes cotton from Farmers' wagons at primary points. On which side of the bale of cotton is the basis made for purchase? Are the Growers paid for their cotton at once, if so, state how it is generally done? At what time of the day is a large percentage of the cotton business in the South done by large Dealers? What is the plan of exhibiting samples of cotton for the sale of it at some places? Do Buyers sometimes talk in a way to induce holders of cotton to sell it? Is it a good policy for a Buyer to attempt to forecast the Market for a Grower? Do Buyers generally follow the fluctuations of the Market? When do Buyers usually report their cotton sales? Describe the functions and purposes of the "Take-up-man." How many Marks generally accompany a shipment of cotton locally? REVIEW (J/TJBSTIONS. How are payments for local cotton usually made? Are Drafts in payment for Foreign cotton accepted without some knowledge of the party on whom they are drawn? What is meant by buying cotton "hog round"? How are the bales usually cut for sampling where a list of cotton is taken up? When should the bales be closely scrutinized for a, more rigid examination? What do you understand by "concentration of cotton," and why the necessity for it? Where is cotton usually concentrated, and what often results after shipping lists are made up in fulfillment of orders? What becomes of the "overs" after all shipping lists are completed? What papers as ofiScial documents usually accompany Domestic Shipments? How are Domestic Shipments paid for? What banks handle the largest percentage of Exchange for payment of Foreign cotton? 420 REVIEW QUESTIONS What guides the banks in determining what Eate of Exchange to apply on such pajnnents? Through what Foreign Commercial Centers are Drafts principally drawn for settlements for cotton destined for England, Spain, Holland, Belgium, Denmark, Sweden and Italy? Through what points for shipments of cotton to France, Germany etc.? How are B/L's worded to protect both the Shipper and Banker in their shipments of cotton? VPhat do you understand to mean a "Waco House," as stated in this Section? What authority has this House for executing its own transactions and under whose jurisdiction does it operate? Define what you consider a "Central Buying Point." Are there many similar "points" in the South, and are they essential to the successful operation of the present System of handling Spot Cotton? What are "Cotton Guarantees," how do they apply, and when are they required for the protection of both Seller and Buyer? How is cotton sold "by sample," who sell it that way, and what kind of cotton is often submitted? What is meant by F. O. B. cotton? If a Purchaser accepts cotton at loading point, F. O. B., is a Guar- antee necessary? How far and how long do Guarantees sometimes follow cotton? Can cotton be sold on F. O. B. terms, by sample. Class Marks, Basis, Average or Even-running? Are Freight, Drayage and other incidental Expenses attached to cotton bought F. O. B. at loading point? Are the charges for compression taxed against the price of cotton purchased either F. O. B. point of origin or destination? Is time of delivery for shipments of F. O. B. cotton a factor to be considered when purchasing? What institutions, in the main, govern in F. O. B. transactions both North and South? Do similar Rules prevail over the South governing transactions in F. O. B. cotton? BKVIEW QUESTIONS. Do Northern Mills require Sellers to Hedge their sales to them? How may a Mill Hedge its purchase without resorting to an Exchange Contract? Do Mills ever Hedge their sales of manufactured articles, where Contracts call for delivery in the future? ■ What character of cotton do Mills generally buy? REVIEW QUESTIONS, 421 What variation or latitude dp they allow from a specific. Type of From whom do Mills usually buy their raw material? , Whom do the Vendors represent and how do they make sales of the cotton committed to them? ;,Do Mills offer a specific price for a definite class of cotton, or do they seek competitive offerings when in the Market? :To whom do Mills look for protection in their purchases? Why have Northern Mills changed their former policy and asstiraed; their present plan of buying? , 'What are their usual methods of present-day buying? On what basis are the Uplands, Short Staple Western and Long. Staple cotton sold to the Mills? What is their allowance for Tare? What Kules govern in the sale and purchase of their, basic ma- terials? How and when are the Differences in Grades established ? What Standards are still utilized by them? ,How are controversies settled? How do they buy Sea-Island cotton? In a general way, how do Southern Mills operate in buying cotton? '.Are the Southern Mills in the Eastern districts governed by as- sociate agrreement? Are their Rules similar to the Association Rules of the Northern Mills? By what Rules are the Southern Mills guided? What character of cotton do they usually prescribe for their use? Do Southern Mills require that Vendors Hedge the cotton sold to them on Contract? Do they offer a specific price for a specific Grade? How do they finally execute a purchase, after notifying the Trade they are in the Market? Through what medium do they generally operate? Do Sputhern Mills buy for Mill delivery. Weights and Grades g'uaranteed? At what time are the Mills generally in the Market? Do Mills contract their cotton for delivery in future months? What advantage have the Mills by contracting their output for months ahead, and how do they protect themselves against fluctua- tions in the cotton Market? As a general practice, do Mills protect their purchases of raw ma- terial and sales of manufactured fabrics, by hedging on the Cotton Exchanges? How and when can a Mill make itself independent of the Market? Do Mills buy on Middling basis? Describe a Southern Mill purchase. What Standard is used by the Associated Southern Mills? 422 REVIEW QUESTIONS How do non-associated Mills in Georgia and Texas buy cotton? What is the difference between purchasing for Domestic Market* and for Exjwrt? Is the relationship between American and Foreign Markets very dose? Through whom do Buyers on this side principally conduct their business for Foreign Trade? How can cotton be sold abroad with reference to Grades, Samples, etc.? With reference to time, what do you understand to be the meas- ing of the terms, "afloat," "prompt," "immediate shipment" or *t© arrive" as desigfnated for some month? How is Foreign Cotton generally sold with reference to net or gross weight? What is the maximuna or minimum weights for tenderable cotton In the Foreigrn Markets? What is the limit of gradation allowable and what Standards or what Association gOTcm? How are settlements for contentions over the delivery of Fc^eig^a Cotton made? Under vdiat terms are Foreign Cotton shipments usually made? What do you understand to be the full meaning and purpose «< the "C. X. F. & 6%" terms? Explain what you consider to be a Franchise. Explain a shipment of cotton under "C. I. F. & 6%" terms. What are the weights that apply, per 100 bales, for the different Types of American Cotton? BEVIEW QtJESTIONS. What do you understand to be the meaning of "Tare" as used in connection with cotton transactions? How do American Mills buy their cotton with reference to Tare? What is the policy of Foreign Mills with reference to Tare? Can you define the difference between Bremen, Liverpool and Havre with respect to their plan of computation in ascertaining Tare? What is the general policy on the part of European Buyers in tak- ing American Cotton? Why do they exact a 6% Tare, and yet will strip some of the bales of their wrapping, weigh those wrappings, to determine an exact Tare? What is the real purpose of the Tare? Can you n^iake a statement showing a shipment of Export Cotton, with a direct application of the 6% Tare? Distinguish the difference between buying Domestic and Foreign Cotton respecting the weight of the Tare? If the Tare on a 500-pound bale of cotton is 22 pounds, and For- REVIEW QUESTIONS 423 eign Importers exact a 6% Tare, how does the American Exporter protect himself against a loss in weight equal to the difference be- tween 22 pounds and 30 pounds? When an American Farmer is paid a certain price gross weight tor Ms cotton, does he really get pay for the bagging and ties on it? Can you show that he does not? How is actual Tare computed for cotton delivered in Liverpool, Havre, Bremen, Manchester, Hamburg, Genoa, Batrceloma, Naples, Trieste and Stockholm? As a general practice, how, and with what materials are American cotton bales wrapped? Why is the jute bagging not a good wrapping for the safe pro- tection of the cotton? What is the difference between the character of wrapping used for eotton in the United States compared with India, Egypt, Brazil and Peru? What is about the average weight for the American, Egyptian and East Indian bale of eotton? Do you think a wrapping composed of cotton material will make a good covering for the protection of cotton? Describe the advantages claimed for the Round Bale. Why has not the Round Bale been universally adopted if it pos- sesses all the merits claimed for it as an economic package? BEVIEW QUESTIONS. What two essential factors are considered in connection with selling cotton for future delivery? Describe two imaginary transactions in which these two factors have expression. What is "Short Selling"? Can a sale be made "Short" and be legitimate? Wlhen would a Short Sale be construed as being illegitimate? Does Short Selling in every instance sigiiify that the sale of "Futures" has reference to an Exchange Contract? Gan Short Sales be made of any commodity, such as wheat, com, oats, stocks, bonds, etc., the same as cotton? What is the difference between the sale of Spot and Future cotton? Why do Dealers ever "sell Short" or "Short the Market"? As an unknown quantity, what may be considered as a fdctor in the Cotton Market that sometimes reflects against the success of a Short Sale? Do the membership of the Cotton Exchange ever act as a unit in patting the Market up or down? Why is it they do not? As a practice, do Farmers ever sell Short? 424 REVIEW QUESTIONS What would you consider some of the conditions that would indilce you to sell cotton Short? Would you consider Short Selling Spot Cotton the same as con- tracting cotton for the Trade, the Mills or Export? How can competition between Buyers virtually destroy the effect of the Short Sale? Do Buyers ever attempt to take advantage of each other as regards Short Sales? REVIEW QUESTIONS. Who sometimes send cotton to Commission Merchants for sale? What are Commission Merchants called who handle cotton con- signed to them? Describe how a Shipper makes up his shipments for consignment? What is the first thing a Factor does after receiving the cotton? When he receives instructions to sell, how does he proceed, and in what way does he make returns and how does he generally pay for such shipments? What advantages have Cotton Factors for the sale of cotton who operate on, an extensive scale? AVhat further advantages have they if given more time to make a sale? How are Factors paid for their services in making sales of their cu stomers' cotton ? How can Shippers consigning cotton to Factors receive money on the cotton before the Factors get it and sell it? What are the four necessary Documents connected with trans- actions for the sale of Export Cotton? Define the purport, meaning and use of the Invoice. What important information is covered in the Invoice, both for Domestic and Export cotton? Is the Invoice for consignments of cotton to Factors the same as that made up for a straight sale to a Domestic Buyer or for Export? Define the difference between the three different forms of Invoices. In a shipment of cotton why is the Draft necessary, and why does a Draft sometimes call for payment at a future date? If a Shipper desires cash on his Draft what are the usual pro- ceedings he undertakes? Sometimes he can get the face value of the Draft, sometimes less and sometimes more ; why is this ? What class of people deal in Drafts and pay cash for them? Why is it that Drafts sometimes do, or do not draw Interest? What kind of money is generally specified for Drafts issued in payment of Export Cotton? Are Drafts for Export Cotton drawn in single, duplicate or tripli- cate form? Why 'are stubs sometimes attadhed' to 'thbse -liraft^ or Bills^^of Exchange? ■ : n.i .., •....! ■-. .m , .: Whdt does 'the Draft show with r^ferfence to the shipdneht, as com- pared to the data in the Invoice? -' - What is the Bill-Of-Ladlhg and'-forWhai 'is it issued?' ' What dii yoii understand to hei an "open'* 'fiilUof ^Eading? - Why are 'the wofds "Shipper's 'Orderl Notify," noted on a Bill- of' Lading? j> :■■ i ■■■!■■■ -'-i ;•..... ..^ :. ■ ; , ,. ~ Is the Bill-of -Lading absolhtely necessary in thfe shipment? Why is the Certificate of Insurance a necessary Document' to a shipment of foreign cotton, and whardatsi does it spefcify? ' Define the data and meaning of a, "Spfecific," "Marine" and "Blauliet" Policy. ' ' ' '■ ' ■'"" " ■ ■'' ■■■ ■'" ■: : .1 '" ■■■■ '' •■ KBViiJw 'ij'uES*rib*is. '-• Can y oil give! the caufee for establishing 'the 'Ne^ Ybrli? Cotton 'Ex- chang'e? .-:..;.,... I ■,. . its membership is limited to how many members? What are the ' requisites ah individual iriust' pioSSfess to be entitled' to a membership in this Exchange? ' '•■-■' • '■ What is the initiation fee,' and wttat arfe' th'e'annual dues? How may an individual secure a "right of iliembership"? Can you outline briefly what are the purposes of this Corporatibn ? Does this" institution buy and sell "Cotton as 'a' corpoi'ate body? If not, how is it bought and sold? What is the principal character of business executed on the floors of this Exchange? What was one of the original , primary functions, of it ? !From among what class of business men are members found? . Do members of this Exchange deal exclusively in Spots or Futures? How do you understand that members may .operate as a unit factor to "manipulate the Market"? , . . Do the Rules .allo\y the membership to operate together with a view of executing trades to their pecuniary^ interests? Is the membership of the New York Exchapge confined to resident individuals only? : ,, ; . How does this Exchange prove itself valuable to the Trade as a factor in securing and distributing information relative to the cotton Market?. '■■-'■ ^^ -, ' , •.; .'• • • - When prices are bid or received- for cottpn does that mean for Spot Cotton or for. Cotton Cratracts? . What are members of the Exchanges called? . How does a Broker operate Tfor a client in. buying or selling, a "Future," when the client makes . no, price, for th^ sale or purchase of the Contract? 426 REVIEW QUESTIONS How may the prices of Futures be increased or decreased by legiti- mate action on the part of the public? What would you consider to be the cause for an advance in the price of cotton? As one of the primary functions of the New York Cotton Exchange was for the purpose of bringing together both Buyer and Seller face to face, and as such function now e)fists only in a limited degree, what do you consider to be the cause for it? Compared to New York, how does the New Orleans Cotton Exchange operate? How long has it been in existence? Why is it a better Spot Market than New York? Is it connected with any other Cotton Exchange, or is it an in- dependent institution operating under its own Kules? Does it have wire connection with important cities of the United States and Foreign Commerical Centers? Bo you think this Exchange has been instrumental in helping to bring the control of the price of American Cotton in the hands of American people? Do you think Cotton Exchanges are advantageous to the Trade, if their transactions are legitimate? What Cotton Standards have been adopted by this Exchange? What Exchanges outside of New York and New Orleans, sell Ji^itures? Define a "Bucket Shop" and its purposes. [See page 342.] REVIEW QUESTIONS. What constitutes the principal business of those Cotton Exchanges dealing in Futures? What do you understand to be the meaning of the word "Future" as applied to the Trade? Under what three heads may Future dealing be divided? Do all Future Contracts contemplate the actual delivery of cotton? What is the least number of bales embodied in a. New York or New Orleans Cotton Contract? What are the essential differences between a New York and New Orleans Cotton Contract? What rules govern the delivery of cotton on Contracts? All Contracts call for delivery of- cotton in certain months, in what part of the month may the delivery be made? On the delivery of Cotton on a Contract who has the right to say on which day of the month it shall be delivered, and what class of cotton will be delivered? How many days has the Seller to notify the Buyer in New York, New Orleans or Liverpool when the cotton will be delivered? REVIEW QUESTIONS 427 What are these days called? On what Grade of cotton is the price of Cotton Contracts based? If Contract Cotton is based on Middling, how are tbs values for the Higher and Lower Grades determined? , Can each party to a Contract exact a deposit from the other as a "Margin'" for protection? How many times is cotton inspected, classed and weighed in New Orleans, New York and Liverpool . each time it changes ownership? Who classifies the cotton delivered on Contracts on any of these Exchanges? Describe how a delivery of Spot Cotton' is made on a Future Con- tract. What do you understand to be. the optional features of a Contract? What is the meaning of a "Hedge"? Define what is meant by a Buying Hedge. When may a Hedge absolutely protect Spot Cotton? ' Describe in detail, by illustration, how a Buying Hedge will give absolute protection ; will give a gain or a loss. Why does a disparity between Spots and Futures affect the purpose of the Hedge? Can you tell how a divergence of parities may cause double loss6.s or double gains, or the absence of any gain or loss? Define a Selling Hedge and tell how and in what way it will give protection to a Dealer in Spot Cotton or a loss to him. Of what does a large percentage of the business transacted on the Cotton Exchange consist? Do Speculators in Contracts have the same rights in dealing in them as those who operate for Hedging? Tell how speculations in Contracts resemble gambling transactions. Describe transactions that may be settled by "direct settlement," or "ring settlement." How does a, member protect a Contract he has bought or sold for a client, and what is required on the part of the client to protect the Broker? What are the brokerage charges and the minimum amount paid for Margins on each Contract dealt in? What are the factors considered by Brokers and Dealers in aiding them to determine a price for cotton? Ordinarily, if Futures fluctuate, what effect does this have upon Spot Cotton? VWhat is considered a legitimate or illegitimate Contract? 428 REVIEW, !aUE3STI0NS, REVIEW QUESTIONS. j. In how many ways. can;a_Futuj^e Contract be operative? Define how Future Contracts can be connected with ■ Spot transT actions as defined, by, o, 6, c, 0, e, and f. . What must be the condition between Spots and .I^utures in order to make the Hedge effectual? , , , If A sells a Future Contract tio protect his Spot cotton, wha^ does he do with his Contract when he sells his Spot cotton? ,, Tell how A can hedge by buying Futures, and under what condir tjon will it protect. Spots ? , i _ ■ i Can you tell some of the ways Cotton Exchanges can be useful to their mejnbers, th^ Trade and jthe public? ., , How may Spot Dealers operate, .who are not members- of the.. Ex- change if they seek protection vinder a. Hedge?,. , . . If a Dealer buys pr sells a Contract, does he receive the Contract after the deal is . consummated? . .- ; What does buying and selling Fptures mean ? . - , Why does a Broker demand a. Margin to protect himself when he buys or sells a Contract on the Exchange, for a client? . .What is the ostensible purpose of . every Contract, .and are they always adjusted according, .to., those purposes? , Describe how a Cotton Firm may, enter the Spot. Market, connect that business with Future, Contracts and inflict a loss upon/itself. • ,If a Dealer has a quantity, of Spot cotton on hand at .a, tinie the Market shows a tendency to decline, would it be advisable to sell Futures? ... , - ■ ..... Would it be advisable under such conditions .to 6w)/ Futures? If a Dealer has< a large quantity o^ Spot cotton hedged , and -seil.s some; of this cotton at; different times, how does he make disposition of his Futures? Do Mills as a general practice resort extensively to the Exchanges for Contracts for protection? Tell how one must operate to buy or sell Futures. If a Dealer is not known to be of high financial standing, vyhat will a Broker require from him as a safe-guard' to himself?.. If a Dealer is known to-be financially strong and responsible, are his purchases or sales executed with promptness, vyithout ■ an immed- iate remittance? , ;.. •. ■ Are trades ujjon the Exchanges, all things being satisfactory,, al- ways execvited with promptness and dispatch? Is the Cotton Code employed extensively between Brokers and Dealers, in their immediate transactions? Can you tell how many Points advance on a Future will equal the value of the ilargin paid, or how many Points decline will consume the amount of Margin paid? If a Dealer pays $100 on a. Contract, how many Points decline must REVIEW QUESTIONS 429 occur before the Broker will call for another Margin or sell oirt the Contract? Does a Broker charge additional Brokerage for transferring a Con- tract of a client from one month to another month? EEVIEW QUESTIONS. What do you understand to be the meaning of the word "Exchange," as. applied to any transaction? In wh^t respects do the different market places for the sale of cotton in the South resemble Exchanges? Co these market places have a listed membership and Bules and Begulations to govern them? Who were the first people to begin the manufacture of cotton for practical and domestic purposes as a commercial commodity? As the manufacturing business grew, why did the idea become emphasized that it was necessary to have some central point at which Buyers could assemble for the purchase of cotton, or to give and receive information? As this idea grew^, what was the result of it and when was the first Cotton Exchange in the world established, and when did dealings in Futures on that Exchange begin? After the establishment of that Exchange, who were the controllers of the cotton traffic of the world and the exclusive price-ma>kers lor American Cotton? Describe the conditions that confronted the American people in the early days of cotton culture. Were there any such things as "Cotton Markets" in those days as we know them now? Wbat can you say of their means of communication by mail, courier and telegraph or telephone? Wiho were the principal Sellers of American Cotton in those dayS after it left the Farmers' hands? Why was it that for a period of nearly 100 years after the intro- duction of cotton as an agricultural product, that its culture received but little stimulation? Wihen was the first Gin invented of any practical inaportance and why did Whitney's invention give such great stimulation to the cotn ton industry? Wlhat kind of gin was in use before Whitney's invention, and what was said to be the daily output from such a Gin? Wihat constituted the total vtreight of lint cotton taken from the seed by one hand as result of a day's labor? Describe how the cotton of the Southern States found a Market in ante-bellum days? How was cotton handled then as a commercial article compared to Sugar, Molasses, Bice, Tar, Turpentine, etc.? MB-15 430 REVIEW QUESTIONS If a Grower sold cotton through a Commission Merchant, did he receive prompt pay for it immediately upon its receipt by the Con- signee? What character of labor was generally employed in the production of cotton before the Civil War? What were the principal means of transportation in getting cotton to Foreign Markets after leaving the Farmer's hands? Describe the conditions that confronted the Southern Cotton Grower and handicapped him in the sale of his cotton by reason of the absence of a source from which he could get some idea of the value of it. APPENDIX APPENDIX. QUAKTEK GRADES. A Trade in Quarter Grades Exemplified. — ^Let it be stated that A sells a list of 100 bales of cotton to B, which consists of a wide rangfe of Grades, say from St. Good Ordinary to Good Middling', inclusive, and in the list are several bales of "gfood style" of Middling, and many bales of "shy" Middling. The "good style" of Middling is known as Eully Middling by the Cotton Exchanges, and the "shy" Middling as Barely Middling. If B in this sale accepts the "full" Type of Middling for Middling, he should accept also the "shy" Middling for Middling, because the good qualities of the first should offset the deficiencies of the last, and enable A to get whole value for his cotton. Further illustrating: Suppose B says to A, "Your 'good style' Mid- dling is not good enough for Strict Middling; I shall cut it down to Middling, and your 'shy' Middling is not equal to a Midddling; I shall mark it down to a Strict Low Middling." Now, if the Fully Middling is worth 12 Pointsi more than Mid- dling, equal to 60c on a bale of 500 lbs., and Barely Middling is worth 17 Points^ less than Middling, or 85c on a similar weight bale, B has gained by such action $1.45 by reducing the gradation on both bales. It should be stated that the recognition of the Quarter Grades by the Cotton Exchanges and the Trade redounds to the interest of the Producer ; for without their position in the classification list, it is evident, as in the case just stated, all Grades not showing clear Types of any particular Grade would be reduced to the Half Grade Type below, at the expense of the Seller or Grower. Present Trade conditions and Mill Rules warrant the raising of one Grade to its Half position above, at the same time demands the reduction of a Quarter Grade to the Half Grade position below, thus giving and taking value for value, as elsewhere stated. Trade Recognition of Quarter Grades. — It may be argued that the intrinsic value between a Fully and a Barely Grade of cotton is so slight as to merit no distinction for spinnable purposes, by reason of the very small percentage of foreign substances contained in them in excess or diminution of their proximate Grades ; but the fact remains that these Quarter Grades have been arbitrarily, estab- lished by the Cotton Exchanges, recognized by the Trade to which iCents per hundred, on and off, for Fully and Barely Middling. aCotton, made by the New York Cot. Ex., Sept. 11, 1912. 434 APPENDIX it has become accustomed, and any system of gradation eliminating them from the list will operate financially against the Grower, unless all cotton could be delivered "even-running';" for under such condi- tions, it is evident that for every "barely" Grade delivered the same should be offset by one "fully" in Type, and no loss could result were the Differences in Premiums and Discounts the same and no excess of weights preponderate either way; but as the Differences applying on the Lower Grades are wider than those on the Higher Grades, to accept the same number of Fully or Barely cotton would operate against the interest of Purchaser, if many Quarter Grades were offered. The United States Department of Agriculture did not see fit to establish Grades of cotton for those recognized as "Quarter grades," because of the fact that the law directing the establishment of them inhibited the Secretary of Agriculture from doing so, it being al- leged that the Spinnable Differences between Quarter and Half Grades were too slight to admit of the difference in distinction, and that it was an uneconomic proposition. In fairness to the Cotton Grower and the Trade, it would seem a matter of justice for the Department of Agriculture to widen its range of Grades to include at least the Tinges and Stains. Narrowing the official list made by the Department, if finally adopted by all the Cotton Exchanges, will go far towards effectually eliminating confusion in the Trade, and will result unfavorably to no one, as every "shy" is compensated for with a "full," and each ac- cepted at the same price as the Full Grade it represents. Should spinnable differences^ ever govern in directing the pur- chase of cotton, the above statement would no longer hold good. MIDDLING. The different Cotton Exchanges, in establishing their Standards, have held to similar names in making up their official lists, but their grade names do not signify the same character of cotton. The Middling Uplands of Texas and Oklahoma are distinctly dif- ferent to that character of cotton called Middling Uplands grown in the red lands east of the Mississippi Eiver, and by reason of the fact that the U. S. Department of Agriculture has not assumed the pre- rogative to classify them separately, the New York Cotton Exchange has not adopted the Government Standards as its official list of Con- tract Cottons, preferring tohold to its own Standards, adopted by all the Cotton Exchanges at a convention held in 1874. The Department of Agriculture, in making its Standards, claims to classify them without regard to the source from which the type samples came, and in this manner standardizing all the Uplands sSee "Spinnable Value," Book 1, p. 70. APPENDIX 435 gTovm, assuming such procedure should produce a set of Types which "would be representative of white American cotton as a whole."* U. S. GOVERNMENT STANDAEBS. By reason of a want of harmony existing' among the Cotton Ex- changes as to their Standards, and the resulting confusion that often occurred because of the members of one Exchange operating with those of another, the efforts and influence of the producers and man- ufacturers of cotton were brought to the attention of the United States Congress, urging the enactment of a law standardizing Amer- ican cotton for the American Trade. Mr. A. S. Burleson, Congressman from Texas, succeeded in getting a bill passed standardizing American cotton, which Standards have been adopted by nearly all the principal Cotton Exchanges of the country. The Act making appropriations for the Department of Agriculture for standardizing cotton becomes effective June 30, 1909. In establishing the Grades of cotton, the Secretary of Agriculture (James Wilson at that time), was further authorized "to prepare in practical form the Standard of said Grades, and furnish the same upon request by any person, the cost thereof to be paid, when de- livered, by the person requesting the same, and certified under the signature of the said Secretary and the seal of his Departnxent." "Carrying out the provisions of this Act, the Secretary of Agri- culture convened in the city of Washington in JFebruary, 1909, a com- mittee of cotton experts inchiding, besides the Department experts, representatives of the different interests of the trade. This com- raStte consisted of Mr. Joseph A. Airey, of John M. Parker & Co., New Orleans, La. ; Mr. James Akers, of Inman, Akers & Inman, At- lanta, Ga. ; Mr. F. M. Crump, of E. M. Crump & Co., Memphis, Tenn. ; Mr. C. P. Baker, of the Lawrence Manufacturing Company, Boston, Mass. ; Mr. Lewis W. Parker, of the Olympia Mills, Greenville, S. C. ; Mr. John Martin, Paris, Texas ; Mr. Nathaniel Thayer, of Barry, Thayer & Co., Boston, Mass.; Mr. Geo. W. Neville, of Weld & Neville, New York City; Mr. Charles A. Vedder, of John D. Kogers & Co., Gal- veston, Texas; and Dr. N. A. Cobb and Mr. E. L. Bennett of the De- partment of Agriculture. The committee was assisted by the fol- lowing expert classifiers : Mr. W. P. Barbot, of the Classification Committee, New York Cotton Exchange; Mr. Jules Mazerat, Chair- man Classification Committee, New Orleans Cotton Exchange, and Mr. J. K. Taylor, with the firm of Wolf & Company, Dallas, Texas. "The Department furnished the committee every facility for its work, having on hand types of cotton from the different exchanges 'Substance of a letter to the author from Dr. N. A. Cobb. Technol- ogist of the Department of Agriculture, dated Jan. 8, 1913. 436 APPENDIX and markets, and materials jfor makings up the grades as provided by law."6 In preserving the Types for future reference, that the indicated ones may not become deteriorated, the Department has placed 50 sets in vacuum storage for use as working duplicatesy believing by this means to preserve them indefinitely as exact Standards as originally adopted." While this plan of preservation of the type sample is unique and untried, the result will be watched with much interest by the Trade, as nothing of which the author has any knowledge has been attempted by any of the Cotton Exchanges or members of the Trade to keep them intact indefinitely under such form of equipment. TEXAS COTTON. A curious fact may be stated here, to-wit, that men who have been connected with the Trade for many years in Texas state that no thought of selecting staple cotton north of Bryan, on the H. & T. C. R. E., up to Dallas, and north of that line east of Dallas, was had many years ago, but now that whole territory has to be gone over carefully to get any commercial 1 1-8. Formerly it was the custom to ship it out classed as i 1-8 without question. This reduction of the length of Staple over Central Texas terri- tory is attributed to the improved methods of soil preparation, seed selection and cultivation; the efforts in growing cotton being directed more to the production of early varieties than to improvement of the Staple, and this has had a tendency to bring down the price of Texas cotton. The black -lands north and northeast of Dallas still continue to produce 1 1-8 cotton of good "body," but when the sandy or clayey lands east of this district are reached, 5-8, 3-4 and 7-8 cottons are found.' BOLLY COTTON. There appeared on the Texas Market in the fall of 1913, cotton from the Bolly Cotton area of West Texas, exhibiting all the character- istics peculiar to Low Grade white cotton. It was shipped and received as Bolly Cotton, but devoid of the tinge or stain that usually char- acterizes Bolly Cotton. This fact is attributed to two circumstances : First, the cotton had matured and opened before it was tinged with frost ; second, excess- ive and continued rains soon following, accompanied by the custom- oFrom! Circular Letter of Dr. N. A. Cobb to the author. •Year book U. S. Department of Agriculture, 1911, p. 65. TMr. Geo. W. Neville, in letter to author Dec. 31st, 1912. APPENDIX 437 ary -winds of that region which blew some of it to the ground, re- duced its Grade. The excess rain caused the open bolls to become more or less rotten, and in attempting to gather such cotton from the stalk part or all of the rotted bolls became mixed with the seed cotton. The customary term of Bolly Cotton was applied to it. The fiber of that cotton was good, but the gradation was reduced to Good Ordinary and Strict Good Ordinary.s GRADE PRICES LOWERED. Buyers taking up cotton are often confronted with conditions that require lowering the price of the Grade, as when Gin Cuts, Naps, Spots and Oif-color appear. If the Grade of a bale shows to be M., but Gin Cuts, Off-color or any of the imperfections noted appear, its value will be reduced to S. L. M. , The same results would follow on any of the Grades. The cotton under such conditions would be quoted as M., Strict Low value ; G. M., Strict M. value, etc. TRADE DIFFERENCES. The Differences "on" and "ofE" for the Grades above and below Md- dling as made by large Dealers do not always, in fact I'arely, coin- cide with those made by the Exchanges, nor do those made by one Dealer always conform to those made by another. A Dealer may change his own Differences one or more times during the cotton buying season. In putting out his notices of change, he refers to them as "Differ- ence Sheets." The Differences are sometimes based on Good Middling, but gener- ally on the Middling Grade. < It should be remembered that Differences have no bearing on what the Middling price shall be, but only affect it in a relative way. The Differences can apply just the same on Middling cotton at 6, 8, 10 or 12 Cents a pound, as at 5 or 15 Cents. If cotton is 7 Cents a pound, Strict Middling may be 3-16 Cents "on;" if it is 12 Cents, "Stricts may still be 3-16 Cents "on." Let's look at the following Difference Sheets put out recently by a large Dealer, with instructions, and based on Good Middling: DIFFERENCE SHEET. Please note the following grade differences to govern our pur- chases from September 16, 191.... (Liverpool class) : F. G. M., 3:16c on G. M., G. M. pass; F. M., 3-16c off G. M.; M., »This cotton was shown to the author in the office of the McFadden Agency at Waco, Texas, in October, 1913. 438 APPENDIX 7-16C off G. M.; F. L. M., 15-16c off G. M.; L. M., 1 7-16c off G. M.; F. G. C, 3 l-8c off G. M.; G. O., 3 l-8c off G. M.; tinges, F. M. and above, l-4c off white; tinges, M. and below, l-2c off white; stains, F. M. and above, l-2c off white; stains M., 3-4c off white; stains, F. li. M. and below, le off white. On basis orders we allow no premiums for cotton above F. G. M. and any M. F. and B. M. F. cotton on such orders has to be in- voiced at F. G. M. prices. We will thank you to please acknowledge receipt of this letter. Yours truly. This firm gave the following change in its Difference Sheet, V7ith no explanation why such changes were made : Please note the following new grade differences to govern our basis purchase, on and from' Monday, October 14, 191.... (Liverpool class). F. G. M., 3-16C on G. M. ; G. M. pass; F. M., 3-16c off G. M.; M., 7-16C off G. M.; F. L. M., 7-8c off G. M.; L. M., 1 3-8c ofl-G. M. ; F. G. O., 2 1-16C off G. M.; G. O., 3 l-8c off G. M.; tinges, F. M. and above, 5-16c off white; tinges M. and below, 5-8c off white; stains, F. M. and below, 1 l-4c off white. On basis orders we allow no premium for cotton above F. G. M., and any M. F. and B. M. F. cotton on such orders has to be in- voiced at F. G. M. prices. We will thank you to please acknowledge receipt of this letter. Yours truly, The fixing of these Differences is made by this firm itself, and any subsequent ones are established the same way. The cause for so doing may be the Mill buying from this large firm, or it may be a purely arbitrary matter with the firm itself. These Differences were not in harmony with those of the Cotton Exchanges at the time, and evidently ignored the work of the Revi- sion Committees of those institutions in establishing gradation Dif- ferences. Instead of giving the full list of Grade names Dealers often giv« advice respecting those Grades on which the changed Differences apply only; that is to say if a Premium of 1-16 and 1-8 are added to S. M. and G. M., the instructions usually read : "Until further ad- vised, increase the Premium on S. M. 1-16, on G. M. 1-8 : reduce the Discount on L. M. 1-4, on S. G. O. 3-8." The Differences applying on similar Grades are not always the APPENDIX 439 same with different Dealers, which fact finds reflection with the Local Buyer. One Buyer may have a basis or limit exactly the same as another, but the Differences not being similar, gives one Buyer tem- porarily the advantage over the other. HISTOEY OF 6 PEK CENT TAEE. Cotton has been grown in America for 123 years as a commercial commodity. At the beginning it was put up in 223 pound packages. These original average weights have gradually increased from 1790 to the present time, being now about 520 pounds. When the weight had reached 380 to 400 pounds, with the weight of the covering known to be approximately 23 or 24 pounds, European cus- tom established the practice of deducting 6 per cent of the gross weight to cover the weight of the bagging and ties, which practice at the time met with no objection, but since the average weight in more recent years has risen to about 500 pounds, to deduct 6 per cent of it would necessarily take 30 pounds from the gross weight. So if the covering on a bale weighed 24 pounds and the 6 per cent applied deducted 30 pounds, a loss of 6 pounds of cotton would fall to the Seller, for if the bale weighed 500 pounds, with an actual Tare of 24 pounds on it, the net amount of cotton left would be 476 pounds; but if 30 ponds were deducted, 470 pounds would stand to the credit of the Seller. Since the advent of the 500-pound bale on the Foreign Market, with demands from that source of Trade for a continuation of the application of the 6 per cent Kule, controversies and contentions have followed. ORIGIN OF BUCKET SHOPS. Man's cupidity leads him into investments which perhaps no other influence would induce him to assume the risk or undertaking. This natural propensitj^ or gambling instinct was no doubt the primary motive that led to the establishment of these places for "Trade," as they were termed by those operating them for the benefit (?) of customers or patrons who cared to take risks on the rise and fall of any commodity regularly quoted on any Stock, Cotton or Produce Exchange or Board of Trade. The New York and New Orleans Cotton Exchanges dealing in no less than 100 bales of cotton for future delivery; the Chicago Board of Trade in no less than 1000 bushels of wheat, 5000 bushels of corn or oats', 250 barrels of pork, 250 tierces of lard and 50,000 pounds of ribs, made the initial purchase of any of these commodities beyond the reach of many, and to get that class of investors or speculators 440 APPENDIX who wanted or would take a risk on a small amount, the Bucket Shop was established. From a few, establishing themselves at first near the great Ex- changes and Boards of Trade, others followed in city and town until the number had grown to approximately 25,000 before the strong arm of the law was evoked for their destruction. The term "Bucket Shop'' originated in Chicago, according to historical data furnished by members of the Board of Trade. Occasionally when trade was dull some member would call out, "I'll send down to the shop and get a bucket f ull,"9 meaning, in a spirit of levity, that he would pa- tronize one of these "Shops'" for a "bucket full of Trade," and thus stimulate the market. Designating such places as "Shops" and pa- tronizing them by the "bucket," led to the expression, "Bucket Shop." The name still remains, and has reference to those establishments where small amounts can be dealt in as represented by trades in Stocks, Grain, Cotton, etc., in contradistinction to those made on an organized Exchange. It is argTied by merobers of the Exchange that legitimate trans- actions in any commodity maintain and stimulate prices for that commodity, whether the transactions apply to deals In the actual article or for future delivery, they being based on the judgment and practical experience of the best business men; while, on the other hand, where wagers are posted as to a rise or fall in the price of any article, no amount of reasoning can substantiate the claim that any benefit can accrue to the price of the article so dealt in. To deal in an article — real estate, live stock or any kind of investment, contributes to the stability of prices ; but to bet the prices will be up or down tomorrow, next day, or some other time in the future, adds nothing in support of valuation. Contracts bought or sold on a Cotton Exchange for speculative purposes solely, are identical in character to those handled through a Bucket Shop. Where such Contracts are entered into without the purpose of Hedging, or without the purpose of. receiving or delivering cotton on .tbem; where they are bought or sold with the intention of mak- ing or losing as the Market responds to their wishes or against them; where they enter a field of investment of this kind knowing that an equal chance exists for their losing or winning; where money is placed on a Contract with an expectation to win, cogni- zant of the fact that a loss may follow, and witi no other consid- erations contemplated, such transactions are nothing more nor less than gambling, and just as reprehensible as any ever executed in a Bucket Shop. •"Grain Trade Talks," No. 4, p. 2, Ware & Leland, Chicago. APPENDIX 441 It has' been argfued that an excessive demand for the purchase of Pntnres Etimulates the price of Spots, while a weak demand reflects against them; If this stimulation is caused by speculative invest- ments and no other, or the absence of such investments causes de- clines, then, logically, the inference is that the price for actual cotton is governed by gambling transactions when dominant in the Tradeio, and on this point, State and National legislation has been invited to outlavy Bucket Shops, and the gambling features practiced on the Cotton Exchanges. Bucket Shops have been legally destroyed in most every State in the Union, and their nefarious efEects on legitimate trade no longer exist, but National laws to control or destroy the baneful practices of illegitimate trading on the Cotton Exchanges are still subjects of Federal consideration and investigation. COTTON TIPS. Members of the Exchanges and large Dealers who are in close touch with the Market often give out information to their custom- ers, and many times to Dealers generally, purported to safeguard the parties advised, in preventing their going into the Market to buy or sell Futures or Spots. This advice may be wholesome and beneficial to the receiver, or an ulterior motive may be concealed in the message. If a Broker or Dealer desires to help a friend by transmitting to him a knowledge of the advantages to be gained by a contem- plated advance in the Market under some co-operative manipulation soon to be executed, the friend receives the benefit of the advance by going into the Market and buying either Spots or Futures, and selling when advised by another "tip," "to get out of the Market," "unload," etc. Usually the recipient of a message to "buy cotton" or "go short," is left to his own interpretation of it as to whether he shall or shall not, if not a personal warm friend of the adviser. Operators desiring the Market to advance may send large num- bers of telegrams and letters of advice to Dealers and Growers, urging a withholding of their cotton from the Market as an in- ducement for a better price to ultimately follow (as a logical sequence to the advice offered), or advise diametrically opposite to this, by gratuitously urging the sale of cotton, to avoid the loss that will result from a contemplated decline, which, from the char- acter of the action advised, will be sure to follow. In addition to private wires, and a cover of the mail, the columns losee "Speculation," Book III. pp. 316-328. 442 APPENDIX of the press are often invaded with data to influence the public to buy or sell cotton, or to urge Spot holders to cling to their cot- ton or sell it. Cotton tips are not always sure guides to success. "BOREOWING COTTON." Large Dealers will sometimes take cotton from smaller ones under peculiar conditions of purchase, more particularly when the Market is depressed or declining. For instance : Evans & Taylor, who buy cotton from the Grow- ers at primary points, have accumulated, say 300 B/C, and the Mai^ ket has declined since their purchase. They want to hold this cotton longer, but wishing to avoid the expense of carrying it or not be subjected to any loss by reason of "country damage" or further decline that may occur, find a way of sale as follows: A large Dealer will offer to take their cotton, say in November, at a certain number of Points off of New York March, and pay within $5, $8 or $10 of the value of a bale at the price of cotton at that time, as an advance payment on the cotton,, and carry this cotton at his ovrai expense until a certain day in March, April or May, at which date Evans & Taylor can make settlement with him. If the Market has advanced at time of settlement, Evans & Taylor will be allowed the profit ; if it is lower, they will not be subjected to any loss because they were guaranteed against any loss by the large Dealer. The resemblance to "borrowing" the cotton appears in this way: Let it be stated the large Dealer has sold a large quantity of cot- ton "short," and finding difficulty in getting the cotton in a way that would prove profitable in filling his commitments, guarantees the small Dealer against any subsequent decline up to the time of settlement, and if any profit accrues, the small Dealer gets it. These advantages are offered to the small Dealer to induce him to surrender the cotton into the hands of the large one. In this way the large Dealer is enabled to fulfill his contract, and perhaps secui'c the right to handle the cotton without payment of full value for it at the time of its receipt; or probably no payment on it at all until final sale, if the large Dealer has a reputable character and is financially strong, and the small Dealer does not need the money. This plan of selling is creditable to the small Dealer, as he has "all to gain and nothing to lose," but it is not often practiced, and when it is resorted to, it is usually under confidential terms. The large Dealer hedges his side of the transaction. APPENDIX 443 STANDAED NEW YOEK EXCHANGE AS AMENDED. At a meeting held by the New York Cotton Exchange in the latter part ol the year 1913, resolutions were passed adopting the U. S. Government Standards for classing Texas and Gulf Cotton, and making Standards of Upland Cotton to match the Government Standards for Texas and Gulf Cottons, unless the Agricultural De- partment in the meantime should standardize Uplands. The Exchange expressed a preference for the Liverpool Stand- ards, which was practically agreed upon in the summer previous at a conference held in Europe between American Cotton Exchanges, European Cotton Exchanges and European Spinners, but finally adopted the U. S. Standards, as above stated. TVom its Official List it eliminated Fair, Strict Middling Fair, Good Ordinary White, and Low Middling Tinged. These changes in Standards and elimination of Grades went into efEeet November, 1914, when Monthly Eevisions were established, instead of re- visions three times a year, as previously. It made the Tare on square bales 25 pounds, to conform) to a re- cent revision of European Tare from 6 per cent to 5 per cent." LIVERPOOL DUE "UP" OR "DOWN." One often hears among the talent, the expression that, "Liverpool is due to come in 3 points up tomorrow," or "Liverpool is due to come in 5 points down on tomorrow's opening," or similar expres- sions, indicating that something exists by or from which a reckon- ing may be made to forecast the "opening Market" for Liverpool on the following day. In determining this matter the Future Markets of both New York and Liverpool are compared and brought into thg calculation to ascertain what is due, up or dov(rn, by utilizing the difference in parity relationship. Let us assume say Jan. 19, 1914, that March-April Liverpool closed at 6.90 (Pence), equalling 13.80 (Cents) in New York. The Liverpool close at 4 o'clock p. m. equals 11 o'clock a. m. New York time. March, New York, say at 11 o'clock is 12.69, the difference then at the moment for the two Markets is 1.11 Amer^ ican Points, that is to say, Liverpool and New York are running within 1.11 Points of each other on the MJarket Option. iiProm a letter to the author from Mr. Geo. W. Neville, ex-Pres- ident New York Cotton Exchange. Since the above resolutions were passed, the N. Y. Cotton Exchange has adopted the U. S. Standard . types, effective April 1, 1915. Letters to the author from Mr. Wm. V. King, Supt. N. Y. Cot. Ex. 444 APPENDIX Let us say that New York closes at 12.65, or 4 Points down from the 11 o'clock quotation. Adding' 1.11 Points to the American close gives 13.76 as a parity value between New York and Liverpool, which, reduced to Pence, equals 6.88 as the flgnre at which Liver- pool March-April will open on the morning of Jan. 20th. The closing on the 19th being 6.90 as comx)ared to a calculated opening of 6.88 on the 20th, shows a difference of 2 Points that Liverpool is due to come in down. Keasoning on the same line, were New York to close higher, then Liverpool would be due to come in up. Contingencies that may cause the American or Foreign Markets to vary widely at times, have their reflections against relative or parity values, and Liverpool may, and sometimes does, come in up, when due to come in doitm, or vice versa. The calculations for the opening in Liverpool may be figured with accuracy, but the behavior of the Market can upset the indicated opening. APPENDIX 445 S! 9 ^ o ? SP S! p" 5<0 o s a<> 22* 22* 2S "22* 22* 2S» 22* 2" 22* 2^3 2"°* ^S vvi S 6S.. a o I a o ; 3\ i a. on — - ,tos oato/^c^ tow rt Qt-IOjJ 00 i/tO Jo *— v» o \00 rfh. M4 oop 00 o\aa 000 00 00 utO 00 vocn 00 00 00 000 00 CdC*l 00 en bo OM 4k ^Ot 4k. p\ OtOl CO b ^4*. b C*>C«4 4h ^m 4h4k. o%o b bc*> bb *-p Op 00 ' » >; 5 < n » » M Z s S s a •a H ff w s. f; «. X 3 3 % 5 s- =« ^ •»> ?B » " ff. w w§ ^ t-"^ a p* H - " M O'g " e 1 |R « M '^T^ s.g ^5- ^ X n W P.: ^ " S 2 ^^H &a 2 3-20 o s c 3 H 3 W 4 td a >< S- CO (L ^ ,7 s M :; » »-l a >I» w > ^ C. 5; ^ k-i^ CO a 446 APPENDIX EEVISION COMMITTEE. Quotations made by both the N. O. and N. Y. Cotton Exchang'es are for M- cotton, with additions and deductions for the Higher and Lower relative Grades. To establish the values of these relative Grades, falls within the province of the Eevision Committee, which for New York consists of seventeen members, ten of whom shall constitute a quorum. This Committee meets on the second Wednes- day of September, the third Wednesday of November, and the first Wednesday of February, "to consider the state of the Market, also suggestions and opinions that may be presented by members, * * * and shall establish the difEerences in values of all grades, on or off, as related to Middling cotton, which shall constitute the rates at which grades other than Middling may be delivered on contract."i2 The offices and functions of the Eevision Committee of the N. O. Cotton Exchange are very similar to those of New York. The N. O. Committee is composed of the Committee on Spot Quotations and the Appeal Committee on Classification acting jointly. Three members of the former and four of the latter Committee constitute a quorum, "whose duty it shall be to furnish, as hereinafter pro- vided, quotations of all grades of cotton enumerated in the rules of the Exchange." This Committee meets "monthly, at 11 a. m., on the second Wed- nesday of each month," and shall also meet at any time when called to do so by a "request signed by fifteeen (15) members of the Exchange."i3 The quotations for the different Grades are based on the Stand- ards of their respective Markets. The fact that the Eevision Committees of the two Exchanges have had delegated to them the authority to establish relative values for the different Grades has been the cause of much censure and criticism, followed with subsequent legislative and Congressional investigations, such being instituted to ascertain the facts existing and to deprive the Committees of the right to establish values for the Higher and Lower Grades, except under certain restrictions that might be allowed, either by law or by the modification of their own Exchange Kules. It is conceded that some factor or agency should make the relative Grade values. Whether based on the average price for izCharter, By-Laws, and Eules N. Y. Cotton Exchange, p. 22, Edi- tion 1910. Since New York has adopted U. S. Government Stand- ards, revisions will probably be made monthly hereafter as in New Orleans. i3Amended By-Laws New Orleans Cotton Exchange, Nov. 4, 1912, p. 23, Edition 1909. APPENDIX 447 such Grades ia a number of Southern Markets, on spinnable ralaes, or both, the result of such action should merit no censure, if the valuations are fair and equitable to all interests concerned, which is a desideratum sought. "On each business day the Committee shall establish and announce the difference between grades in the manner and under the condi- tions described in the United States Cotton Futures Act, Section 6, and in compliance with such rules and reg^ulations as the Secretary of Agriculture may from time to time promulgate." — ^Part Amend- ment No. 7C, N. Y. Kevis. Com., stating how often the Kevision Committee shall meet to establish Differences. WAREHOUSES. Connected with every cotton manufacturing concern of any mag- nitude, is found a Warehouse of a g^reater or less capacity, as a factor necessary for the protection of the raw material purchased. Many large Commission Houses, Exporters and Importers, both in America and foreigrn countries, provide suitable warehouse facilities, deeming them necessary adjuncts for properly caring for and pro- tecting the cotton bought, sold, or committed to them for handling. Warehouses serve a good purpose, namely: To protect cotton from the destructive influences of the w^eather, to prevent the occurrence of fire, offer better facilities for sale, and as places for concentration. They are usually of one story, in America, ranging in style from a light frame structure, covered with corrugated sheet iron, to heavy brick, cement or rock walls. The South contains a large number of lightly constructed ware- houses of the first inentioned class, found at many primary points in all the Southern States. At all the Southern Ports, and connected with Southern and East- ern Mills, brick Warehouses are universally in evidence. The Mills, as a rule, own Warehouses, but in some exceptional cases, independent Warehouses in proximity to the Mills care for the Mills' cotton. The cotton Warehouses of Manchester and Liverpool, England, are usually built of brick or stone, and often rise to the height of six and seven stories, the cotton being hoisted or lowered by means of properly constructed block and tackle, operated by steam, gasoline or electric motors. Outside of Warehouses under the direct ownership of the Mills, private parties are the possessors of many in Liverpool, also many are owned by the Liverpool Dock Board, a Government institution. All Warehouses formerly built in Bremen rose to the height ot one story only, while some of those of latter day construction are built of brick, 4 floors; the foundations made of cement; the floors of double wood, separated by asbestos, and the double roofs of concrete. 448 APPENDIX The Warehouses have separate apartments divided by flrc-proof walls. The pillars supporting the superstructures are of reinforced concrete, covered with brick. Such structures, often spoken of as "Cotton Safes," are practically, if not absolutely, fire-proof. Should fire occur within their walls, combustion would be prevented when the doors were closed, as no air conld enter to aid it, for the roofs, like the walls, cut off the entrance of air. At the front of the new Warehouses, sprinklers are attached, ready in any emergency to do duty in not only protecting the cotton in- side, but as a provision against the spread of fife to any adjacent buildings. The Warehouses at Havre are of one-story construction, strongly built, usually of brick, with suitable division vralls of fireproof ma- terial, equipped with such apparatus for fire protection as local con- ditions demand. The occurrence of fire in the Warehouses at Havre is very rare. WAREHOUSE CAPACITY. LiVEEPOOL. — The capacity for maximum storage in Liverpool Ware- houses reaches a total of 1,800,000 bales, principally handled by the Liverpool Salvage Association, who have 500 Warehouses and sheds certified by it for cotton storage. Ninety-five per cent of the Warehouses are more than a quarter of a century old. Manchestee. — ^While cotton represents only a fraction of the stor- age capacity of the Manchester Warehouses, she can, through the Manchester Ship Canal Co., protect 125,000 to 150,000 bales. Bremen. — ^There are a number of old-style, one-story Warehouses at Bremen of an average capacity of 3,000 bales each, while the new buildings protect about 15,000 bales. Havbe. — ^The author has no data on the Warehouse facilities of this important port. WAREHOUSE CHARGES. LxvEEPOOL. — One penny (2c) per bale per week, as a rental or storage charge. Insurance varies, a cheaper rate being extended as the time lengthens ; that is, a rate appljring for one month would be proportionately less were the Insurance extended to six or twelve months. It is usually based on the $100 valuation. IklANCHESXEE. — TThe rate is 1 l-2c per bale per week, vrith Insur- ance about the same as Liverpool. Havbe. — Storage is 1 Franc per month for 1000 Kilos, equal to 19.3 cents for 4535 lbs., or about 20c for 9 bales per month, slightly more than 8c a bale a month, which it will be noted is much cheaper than Liverpool or Manchester. The rate of Insiu-anee is $2 per $1000 valuation.!*. The reader's attention is dravra to the fact that all Mills and Buyers of cotton in large quantities, at exporting points, carefully pro- APPENDIX 449 tect their pvirchases, by shelter under the Warehouse, and no matter when, where or at what time a Mill purchase is made, the item for Warehouse storage must be considered, and charged againfet the price made to the Grower, and he should know that if his cotton is not ware- housed at home, he pays the price to have some one else warehouse it for him. MUTUAL ALLOWANCES. By arrangement between Buyer and Seller, tariff exactions are sometimes modified by conceding to each other certain allowances to be deducted from or added to the Invoice Weights. The Invoice Weight is not only guaranteed, but should any gain accrue, the Seller is ac- corded that amount as a credit on the shipment, whereas, if any loss is found, the Buyer is reimbursed. Such "allowances" are termed "mutual." In their application tile 1 per cent Franchise may be recogrnized or disregarded, or recognized as covering the vreights only, as the terms of the contract may pre- scribe. To prevent the origination of foreign Claims on export shipments many Exporters enter into arrangements with their foreign corre- spondents or Buyers of cotton, stipulating the terms of delivery re- specting the Tare on shipments as set out in Mutual or Friendly Allowances. FRIENDLY ALLOWANCES. Not infrequently in the early part of the season indefinite quantities of cotton reach the foreign Buyer through the medium of "Friendly Allowances," which in its literal interpretation means allowances agreed upon as mutually satisfactory. This custom is evident at a time when Spinners are short of raw material and offer no exactions as to Tare, but rather than be throvra to any delay in getting the cotton they offer to accept a certain al- lowance and make no test for Tare. The foreigrn representative of the Shipper wUlingly accepts the prop- osition as the latitude is allowed for securing gains by escaping the direct application of the 6%, or any rate 'fare in such mutual agree- ments. The Spinner knows that he must concede something to allow the free moevment of the cotton to his mill, therefore proposes to accept a certain allowance for Tare at something less than the 6% Kate. ■•Mendly Allowances should not be confused with Mutual Allowances. "The data respecting Warehouses were obtained in May, 1912, from Mr. Geo. W. Neville, New York ; Mr. J. I. Briggs, Liverpool ; Mr. Albrecht, of Albrecht, Weld & Co., Bremen; and Mr. Etienne Dennis, Havre, through Mr. Neville. 450 APPENDIX AMENDMENTS TO THE UNITED STATES COTTON FUTURES ACT. As re-enacted Aug'ust 11, 1916, the following most important changes have been made. "In the seventh subdivision, of Sec. 5, authority is conferred upon the Secretary of Agriculture, in case of disputes referred to him, to include in his findings a complete classification of the cotton for the purposes of delivery on future contracts. Under the act of August 18, 1914, his findings were confined to the specific question of grade, quality, or length of the staple in dispute. For example, if the dis- pute involved grade only and the cotton was found to be less than seven>-eighths of an inch in length of staple, the Secretary had no authority to include in his findings a statement as to length of staple. "A new section, known as section 6A, is inserted, which provides an optional contract under which parties may, without being sub- ject to tax, agree that, under certain specified conditions, the buyer may demand delivery of the basis grade named in the contract."* The amendment of the law by enacting Sec. 6A clause, seems to have given satisfaction to both members of the Cotton Exchanges and the Trade. The list of Official Cotton Standard has been broadened to include Tinges, Stains and Blues. The entire official list as made and adopted, is : Middling Fair Strict Low Middling Strict Good Middling Low Middling Strict Middling Strict Good Ordinary Good Middling Good Ordinary Middling Yellow Good Middling Tinged Yellow Strict Middling Tinged Yellow Middling Tinged Yellow Strict Low Middling Tinged Yellow Low Middling Tinged Yellow Good Middling Stained Yellow Strict Middling Stained Yellow Middling Stained Blue Good Middling Stained Blue Strict Middling Stained Blue Middling Stained This list is known as the "Official Cotton Standards of the United States," and can be purchased directly from the Secretary of Agri- culture, Wnshington, D. C. Those who desire to purchase should re- quest application blanks from Mr. Charles J. Brand, Chief, Office of Markets and Eural Organization, Washington, D. C, upon which blanks, application should be made for the whole list of Official Grades, for the list of white cotton or for one or more boxes of any Grade. "Service and Regulatory Announcements, U. S. Dept. of Ag., No. 10, Sept. 1, 1916. APPENDIX 451 The list of white cottons cost $20; the list of colored cottons, $25, and any one box samples, $2.50 each, in Washington. The charges for transportation are additional. Those possessing a set of the old Standard types, may box and ex- press them to Washington, charges collect, and receive a credit allow- ance of $5.00 for them as part payment for a set of revised types. The following Cotton Exchanges and Cotton Associations have adopt- ed the Official Cotton Standards, on which they base their daily quotations : New York Cotton Exchange New Orleans Cotton Exchange Montgomery Cotton Exchange Selma Cotton Exchange Little Rock Board of Trade Mobile Cotton Exchange Augusta Cotton Exchange Savannah Cotton Exchange St. Louis Cotton Exchange Vicksburg Cotton Exchange Charleston Cotton Exchange Memphis Cotton Exchange Norfolk & Portsmouth Cotton Exchange, Norfolk Galveston Cotton Exchange Waco Cotton Exchange Houston Cotton Exchange Dallas Cotton Exchange Paris Cotton Exchange San Antonio Cotton Exchange Ft. Worth Grain & Cotton Exchange New England Cotton Buyers' Asso- ciation, Boston Fall Eiver Cotton Buyers' Associa- tion Oklahoma State Cotton Exchange, Oklahoma City Cotton Manufacturers' Association of South Carolina Texas Cotton Buyers' Association, Waco Cotton Manufacturers' Association of North Carolina "In addition, most of the largest cotton mills, factories, etc., are using the Official Cotton Standards in the conduct or their business," evidencing the fact that the Government's efforts to put out standard types of cotton acceptable to the Trade is meeting with success. Under the Cotton Futures Act, the Secretary of Agriculture being the referee in disputes arising over Grade, Staple or Quality of Cotton delivered on Contracts, has established certain Bules and Eegulations governing his actions in matters of controversy, and in defining what shall not be delivered on Contracts, specifies the following : GIN-CUT COTTON. Gin-cut cotton is cotton that shows damage in ginning, through cutting of the saws, to an extent that reduces its value more than two grades, said grades being of the official cotton standards of the United States. Gin cutting of a less extent than that mentioned above which re- duces the cotton below the value of Good Ordinary would render the cotton untenderable though the extent of injury were less than that described, as the fifth subdivision of section 5 states specifically that 452 APPENDIX cotton the value of which is reduced below that of Good Ordinary shall not be delivered on, under, or in settlement of a contract. EEGINNED COTTON. Eeginned cotton is such as has passed through the grinning' process more than once ; also such cotton as, after having been gintted, is subjected to a cleaning process and then baled. EEPACKED COTTON. Kepacked cotton will be deemed to mean factors', brokers', and all other samples; also "loose" or miscellaneous lots collected together and rebaled. FALSE PACKED COTTON. Cotton bales will be deemed false packed whenever containing sub- stances entirely foreig^n to cotton, or containing damaged cotton in the interior with or without any indication of such damage upon the exterior; also when plated (that is, composed of good cotton upon the exterior and decidedly inferior cotton in the interior) in a man- ner not to be detected by customary examination; also when contain- ing pickings or linters worked into them. MIXED PACKED COTTON. Mixed packed cotton shall be deemed to mean such bales as show a difEerence of more than two grades between samples drawn from the heads, top, and bottom sides of the bale, or when such samples show a difEerence in color exceeding two grrades in value, said grades being of the official cotton standards of the United States. WATEE PACKED COTTON. Water packed cotton shall be deemed to mean such bales as have been penetrated by water during the bailing process, causing damage to the fiber, or bales that through exposure to the weather or by other means, while apparently dry on the exterior, have been damagfed by water in the interior. COTTON OF PERISHED STAPLE. Cotton of perished staple is such as has had the strength of fiber as ordinarily found in cotton destroyed or unduly reduced through exposure, either to the weather before picking or after baling, or to heating by fire, or on account of v^ater packing, or through other causes. COTTON OF IMMATUEE STAPLE. Cotton of immature staple is such as has been picked and baled before the fiber has reached a normal state of maturity, resulting in APPENDIX 4 53 COTTON OF SEVEN-EIGHTHS INCH STAPLE. After investigation it is likely that a standard for cotton seven- eighths of an inch in length of staple will be issued. In the mean- time, the examiners authorized to hear disputes will pull the cotton so that the ends will be squared off fairly well without unduly re- ducing the bulk of the drawn sample. When the measure is applied a fair quantity of the cotton must remain in order to show that the sample has not been pulled too fine before measuring. When thus pulled and measured as cotton experts are accustomed to do its fair average length shall be not less than seven-eighths of an inch, in order that the cotton be tenderable under a contract made in compliance with section 5 of the act. 454 APPENDIX BIBLIOGRAPHY. Helpful sources from which material information has been drawn were found in the following books, bulletins, reports : AGRICULTURAL DEPARTMENT : Census Bulletins Consular Reports Crop Reporters Reports of the Commissioner of Corporations and Cotton Exchanges Yearbooks. "BOOK OF THE UNITED STATES." Edition 1838. BROOKS: "The Story of Cotton." COTTON EXCHANGES: Constitution and By-Laws of Bremen New Orleans New York Rules of Galveston Little Rock Memphis Savannah DISPENSATORY, UNITED STATES: Edition 1890. "ENCYCLOPEDIA BRITANNICA," MAURY : Geographies. MILLS: Dallas Cotton Mills, Dallas, Texas. Eagle & Phoenix Cotton Mills, Columbus, Georgia. Pacific Mills, Lawrence, Massachusetts. PEREIRA: "Materia Medica," Edition 1854. PRESCOTT: "American Encyclopedia." WATKINS: "King Cotton." Scientific American Supplement. The Author is indebted to the following gentlemen for their valuable assistance in compiling this work and desires to express to them his profound thanks for this service : CRESPI & CO., Milan, Italy, and Waco, Texas. Cotton Buyers and Exporters. DODSON, GEORGE B. & CO., Galveston, Texas, Ocean Freight Brokers and Freight Contractors for Export Cotton. EIERMANN & LUCUS, Hamburg, Germany. Publishers. GORDON, W. W. & CO., Savannah, Georgia. Mill Buyers and Exporters of Sea Island Cotton. GUENTER, ANTON, Bremen, Germany. Cotton Controller and Adjuster. HESTER, HENRY G., Sec. New Orleans Cotton Exchange. LOEB, HERMANN, Shreveport, Louisiana. Cotton Buyer and Exporter. MAYFIELD, E. B., Austin, Texas Railroad Commissioner. NEAL, W. J., Waco, Texas, Agent Geo. H. McFadden & Bros. Agency. NEVILLE, GEO. W., New York. President N. Y. Cotton E.xchange, Mill Buyer and Exporter. PARKER, LEWIS W., Greenville, S. C, Ex-President American Cotton Man- ufacturers* Association. TREZEVANT & COCHRAN, Gen. Ins. Agts., Dallas, Texas. WOODBURY, C. J. H., Boston Massachusetts. Sec. National Association of Cotton Manufacturers. INDEX. Abbreviations, 101. Accumulated "overs," 235. Agreements, 107. between classes, 9. American-German weights, 203. American Round Bale, 400. standard classification, 76. Arbitrators, 102. Arithmetic of cotton, ,100. Atlantic cable, 313. Averaging grades, 91. prices under, 137. 1st process, 139. 2nd process, 140. 3rd process, 145. 4th process, 153. B Bagging, cotton material, 230. jute material, 256. Bale, American round, 271, 400. compressed, 400. density of, 400. formation, 14. shipment of, 402. Baling cotton, 394. Bankers' dealings, 194. Basic contracts, 325. cotton calculations, 131. Bears, 102. "Benders," 54. Bibliography, app., 451. Bill of lading, 280, 285. domestic, 286. through, 286. Bill of exchange, 164, 296. Blacliboard, use of, 20. "Blues," blue cotton, 51. Bolly cotton, 49; app., 436. Borrowing cotton, app., 442. Brazilian cotton, 354. British India cotton, 358. North Borneo, 366. Broker, 103. Bucket shop, 342. Origin of, app., 439. Bulls, 103. Buying and selling futures, 335. Buying spot cotton, 212. C Carolina mill rules, 247. Causes for cotton grades, 1. Centimes, Table XXIV, 187, 192. Central buying points, 237. Certificate of insurance, 288. Civil War, 307. C. I. F. terms, 254. C. I. F. and 6 per cent, 254. Charges, buying and selling futures, 326. Checks and drafts, 167. Chinese cotton, 362. "Churka" gin, 378. Clemson College, 96. Code, cipher, 104. C. N. D., 106, Commission merchants, 306. shipments, 306. Compresses, cotton, 397. Common point territory, 225. Computations, European, 259. Concentration, 233. Concerning U. S. Gov't Standards, 19. Condensers, gin, 393. Conditions of country, 1819-1840, 303. Contracts, 104. N. T. Exchange, 316. N. O. Exchange, 317. optional features of, 320. Contributory territory, 224. "Controller," 262. Correspondents, bank, 169. Cotton area and production, 367. United States, 360. "body," 80. North Borneo, 366. Classer, The, 9. Classification, general. 1. specific, 26. Choice Floridas, 53. Georgias, 53. Common or "dogs," 53. Culture, China, 363. Egypt, 360. Japan, 364. Mexico, 357. Peru, 356. other countries, 364. dealers, 215. early experiments, U. S., 371. export, 159. Fancy Floridas, 53. Georgias, 53. futures, 216. Act, U. S., 98. buying and selling, 316. damage, 56. delivery of spots on, 316. for hedging, 316. speculation, 316. guarantees, 238. 456 INDEX "locks," 2. long staple, upland, 352. markets, 218, 319. Medium Fine, 53. plant, 1. botanical character, 347. fiber, 67, 345. quotations, 115. presses, 394. wooden screw, 395. sample to draw, 16. short staple, western, 353. tips, app., 441. wrappings, 267. Country damage, 60. Grown, 178, 188. D Daily fluctuations, 230. transactions cotton exchanges 219. Damage cotton, 57. Delivery of spot cotton, 216. Differences, 92. Difference percentages, 95, 97. sheet, app., 437. trade, 96. Direct settlements, 325. Discounts, 108. Discretion; 144. Display, 20. Displaying samples for gradation work, 17. Distributers, Gin, 367. Domestic purchase, 289. shipments, 236. Drafts, 168. 280, 284. acceptors, 168. domestic, 168. sight, 167. time, 167. Drawing samples, 16. "Dusties," 51. E Early experiments, cotton, 370. European mills buy net weights, 257. Even-running cotton, 89, Evolution of cotton gin and press, 371. Exchange, 167. bill of, 168. buying and selling, 170. circular, 170. course of, 168. domestic, 170. English, 179. French, 181. foreign, 177. German, 185. indirect, 175. other countries, on, 191. rate of, 168, 187. to find cost of, 171. Exchange cotton markets, 219. Exchanges, cotton, 297. first, 382. other, 315. usefulness of, 334. Export buyers, 218. buying, 251. cotton, 252. quality, 253. time, 253. "afloat," 253. "immediate shipment," 263. "prompt," 253. "to arrive." 253. weights, 252. F Factors, cotton, 108. Fair cotton, 27, 45. types, 6. Fast packets, 303. Feeder, Gin, 392. Flat cotton, 109. Florin. 178. First process, averaging, 137. F. O. B. cotton, 240. Foreign Exchange quotations, 194. Coins, 178. shipments, 251. Franc, 178, 181, 187, 188. Franchise, 252. Freights, inter-state, 286. intra-state. 286. Ocean, 159, App., 445. Freight rate sheet, App., 445. Friendly allowances, App., 449. Fully and Barely, 5, 49. Full grades, 4, 6. Future contract with spot cotton, 332. dealings explained, 338. sales. 95. telegrams, 339, 340. Futures, buying and selling, 109. 317. G German-American weights, 204. Gin breasts. 388. brush, 390. "cuts," 2. cleaners, 392. condensers, 393. distributers, 392. "falls," 4. INDEX 45T feeders, 392. mote boards, 91. operation, 14. ribs, 388. "roll," 14. roller, 378, 379. saw, 388. Good Middling, 28, 41. tingred, 8, 47. Good Ordinary, 28, 33. Gradation, starting- poi&t, 76. work, 21. Grade-causes considered, 9. first Impression, 24. names, 4. inlUals, 101. prices lowered, App., 437. values, 78. Grades, higher, 6. lower, 6. Gulf cottons, 254, 255. H Half grades, 5. Hedge, 109. buying, 321. selling, 323. Hedging, 109, 316. Higher grades, 6. History of Cotton, 345. 6 per cent Tare, App., 439. "Hog round" cotton, 233'. How cotton markets are made, 218. Hurried harvesting, 13. I Important factor, VII. Inch, 202. Inferior cotton, 32. Initials of grade names, 132. Insurance certificate, 288. policy, blanket, 288. marine, 288. specific, 288. Intermediate cotton buyers, 216. Invoice, 110. commission shipment, 282. sales shipment, 283. J Japan cotton, 364. K Killograms, 201, 202-3. Korean cotton, 364. Kran, 178. I< I>east amount contracted, 318. legitimate, illegitimate contracts, 330. Letter of advice, 294. Light, 22. Limits, cotton, 222. Linters, 55. Lira, lire, 178. Liverpool Cotton Association, 302. due "up" or "down," App., 442. Local brokers. Northern, 243. primary buyers, 216. "Locks," cotton, 2. Long cotton. 111. staple cotton, 244. upland, 352. "Loose," 56. Lower grades, 6. Lowry bale, 401. Low ordinary. 6, 29, 32. M Mail facilities, 304. Margins, 111. Mark, 178. Market closes. 111. Conditions, 377. opens, ll'l. Marketing cotton, ante-bellum days, 374. in Alabama, 375. Arkansas, 375. Georgia, 375. Louisiana, 376. Memphis, 375. Mississippi, 376. North Carolina, 376. South Carolina, 376. Texas, 376. Matching cotton samples, 30, 31. Memorize grades, 8. Merit value, 78. Metric measures, 201. Middling cotton, 4, 6, 28, 38. App., 434. Alabama, 67. South Carolina, 74. Stain, 8, 44, 47. Tinge, 8, 44. Fair, 4, 6, 27, 40, 47. types, 6. Mill buying. Northern, 241. Southern, 246. purchase. A, 260. requirements, 89. Millimeters, 201, 202. Milreis, 178. Modern gins, 388. Moneys of Austria-Hungary, 188. Belgium, 187. Denmark, 189. Greece, 188. Italy, 187. Japan, 189. 458 INDEX Mexico, 189. Norway, 188. Russia, 189. Spain, 188. Sweden, 188. Switzerland, 188. Monthly ocean freight rates, App., 445. Munger's Glnners' compress, 400. Mutual allowances, App., 449. N Naps, neps, 3. New England Terms, buying Amer- ican cotton, note, 246. New Orleans Cotton Exchange, 313. annual dues, 313. chartered, when, 313. contract, 316. futures, 115. importance of, 314. initiation fee, 313. purposes, 313. spots, 115. New York Cotton Exchange, 309. contract, 316. initiation fee, 309. membership, 310. official grade list, 132. origin of, 309. right of membership, 309. Note to Instructors, 17. Notice of shipment, 282. O Oft colors, 51. "Oft," 157. "Oft white," 156. Official lists, 72. Operating in detail, 227. Ordinary cotton, 6, 29, 33. types, 6. Original saw gin, 386. "Other" Exchanges, 215. "Overs," 235. P Paddle wheel steamer, 303. Parity, 111. Patch, cotton bagging, 263. Payments for domestic and foreign cotton, 236. for local cotton, 233. Pence, 184, 192. Pfennigs, 185, 192. Peseta, 178, 188. Peso, 178, 189. Piaster, 178. Pickings, 64. Point, 116. table of, 117. Pound, Sterling, 178, 179. Practical gradation work, 24. Premiums, 112. Prices for cotton. 327. Primary buyers, 215. prices to farmers, 265. Primitive gins, 378. Problems Involving the use of — 1 cent, 121. 1/2 cent, 122. 1/4 cent, 124. 1/8 cent, 125. 1/16 cent, 127. 1/32 cent, 129. Projection method, 87. Pulling for Staples, 82. Q Quarter grades, 5, 49. B Railroad construction, 303. Rate of exchange, 168. Ready reference grade table, 27. , Reclamations, 112. "Reds," 51. Reimbursements, 295. Reporting cotton sales, 231. Representative cotton firm. A, 223. Reserve agents, 169. Review problems, 207. Revision Committee, N. T., N. O., App., 446. Ring settlements, 325. Roller Gin, 380. Round bales, 271. Ruble, 178. Russian cotton, 362. S Sales confirmation, 290. Samples, rolled, 20. "Sandies," 51. Savannah, The, 303. Saw gins, 386. Scalpers, 112. Sea Island cotton, 53, 350. Selling and buying by sample, 239. Sellers protection under the fran- chise, 253. Separate grade descriptions, 32. Shilling, 179, 184. Shipment compressed cotton, 402. Shipping documents, 280. Marks, 232. Short selling spot cotton, 273. Short, short cotton, shorts, 112. staple length, 244. Sight drafts. 167. Six and quarter (6 1/4) point meth- od, 145. INDEX 459 Specific gradation, Tinges and Stains, 45. Speculation, 316, 328. Splnnable values, 78. Spinner buyers, 216. Splits, 114. Spot cotton, Spots, 113. . Standard of weights, 201. Standards, 69. compared, 76. Liverpool, 76. private, 76. _ TT. S. Gov't.) 70, App., 435. Staple cotton quotations, 7t). Staples, 77. Stapling:, 78, 81. Staple cotton quotations, 80. Steam packer, 396. Straddles or spreads, 114. Strict good middling, 6, 27, 42. Tinged, 8, 48. Strict middling, 5, 6, 28, 41. Low middling, 4. 6, 28, 37. Tinged, 8, 48. Substances affecting gradation, 12. T Table, Full, Half, Quarter grades, 4, 6, 6. Tinges and Stains, 8. grade, ready reference, 27. Tinge and Stain, discounts, 48. of Staple Cotton, 53. of U. S. Gov't. Standards, 69. Standards compared, 75, 76. Staple cotton quotations, 80. differences, 93. trade and spinnable differences compared, 97. New Orleans spots and futures, 115. of Points, 117. common and decimal fractions. 120. common fractions with decimal equivalents of a dollar, 119. N. T. Cotton Exchange official list, 132. foreign moneys, 178, 187. decimal Cent, Pound (Sterling) rate, 183. decimal value Shillings, Pence, 184. Cents, Pfennigs, Centimes and Pence, 192. Value Mark, different exchange rates, 197. Value Franc, different exchange rates, 198. inch and millimeters compared, 202. American-German weights, 203. German-American weights, 204. Tabular statement, 27. Tael, 178. Take-up-man, 232. Taking up cotton, 231. Tare, 256. Tare allowable, cotton shipped to — Barcelona, 267. Bremen, 267. Genoa, 267. Hamburg, 266. Havre, 266. Liverpool, 266. ' Manchester, 266. Naples, 267. Stockholm, 267. Trieste, 267. Tare, purposes, 263. testing for, 262. to American mills, 257. European mills, 257. history of 6 per cent, App., 413. primary price to farmers, 265. Terms, 102. Texas cotton, 74, 253, 254, 265. The cotton buyer, 215. Time Drafts, 167. of contract, 316. Tinges and Stains, 7, 46. Tips, cotton, App., 441. Touch of samples, 18. Transportation, A, 382. Transportation damage, 62. Twelve IT. S. spot markets, 98. Two-sided bales, 14. TJ Usefulness, Cot. Exch. of the, 334. Upland cotton, 81, 244, 264, 255. Carolinas, 81. Georgia, 81. Mississippi, 81. Oklahoma, 84. Piedmont, 84. Texas, 84. W Warehouses, App., 447. Waco House, 237. Weights, 253. Whitney's Gin, 382, 383, 384. Wooden screw press, X, 394. Working types, 17. Wrappings, cotton, 267. Y Ten, 178.