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YRARELI OOADIHO
HD 9 0 H
·A35
Losses due to receiving contract cotton at erroneous differences....
Page.
XIII
XV
Tendency of errors in differences to increase discount in contract price___
Importance of maintaining parity between spot and contract prices__--
Maintenance of parity essential to proper conduct of “hedging" transac-
tions...
Alleged correction of errors by discount in contract price..
Effect of errors in differences on sellers of contracts___
Heavy losses due to New York revision of November, 1906.
Alleged conspiracy in the New York revision of November, 1906_.
Other alleged abuses of power by revision committees_----
Disturbances of parity between spot and contract prices in the New York
market a frequent occurrence_---
Disturbances of margin less severe under commercial-difference system__
Effect of errors in differences on stock of cotton at New York.
Attempted defenses of fixed differences__.
Fixed differences unjust to the buyer----
Contention that differences should be absolutely permanent.
Alleged abuses of the commercial-difference system__-.
29
31
Fixed differences a defiance of commercial principles__
Necessity of a return to a commercial basis in the New York market_
CHAPTER I.—GENERAL NATURE OF FUTURE TRADING AND FUNC-
Sec. 1. Introductory
TIONS OF COTTON EXCHANGES.
Scope of the investigation---
What future contracts are
Cotton adapted to the future system---
Origin of future system in the cotton trade_.
2. Binding nature of future contracts_.
Legality of future contracts_---
Distinction between "options" and future contracts__.
35
36
37
39
42
44
46
48
54
3. Future system as a means of insurance against risks of trans-
actions in actual cotton-The "hedging" function----
Importance of purely speculative operations----
4. Organization and functions of cotton exchanges_
Nature of cotton exchanges-----
An exchange a great market place.---.
2
CHAPTER II.-NATURE OF FUTURE CONTRACTS IN COTTON.
Actual method of handling cotton at New York intended for
classification ----.
Inspection fund of the New York Cotton Exchange.
Comparison of New York and New Orleans methods of classi-
fication
5. Method of establishing differences between grades of cotton de-
livered on contract in New Orleans_____
Allowance for staple cotton_-_.
Special characteristics of spot quotations.
6. Method of establishing differences in New York
Earlier methods of establishing differences in New York.
7. Method of establishing differences in Liverpool_.
Allowance for extra staple in Liverpool.
93
8. General method of establishing spot quotations in southern mar-
9. Special characteristics of basis contracts__
Price of contracts ordinarily below price of spot middling.
Surplus grades ordinarily those tendered on contract_
Seller's option as to date of delivery_
CHAPTER III.-EFFECT OF ERRORS IN DIFFERENCES ON PARITY
BETWEEN SPOT AND CONTRACT PRICES.
I. IMPORTANCE OF MAINTAINING A NORMAL PARITY BETWEEN THE TWO PRICES.
97
98
99
Sec. 1. Introductory-
101
2. Particular importance of maintaining a normal parity between
the spot and contract prices in the case of hedging operations__
Buying hedges_____
102
3. Importance of maintaining a normal parity from the standpoint of
the speculator.
109
II. EFFECT OF ERRORS IN DIFFERENCES ON HOLDERS OF CONTRACTS AND ON PARITY
Sec. 4. Readjustment of contract price to offset effect of such errors.___
5. Effect of errors in differences usually to send the contract price to
a discount..
111
114
III. EFFECT OF NEW YORK REVISION OF NOVEMBER, 1906, ON CONTRACT PRICE.
Sec. 6. Failure of revision committee to recognize commercial conditions_
Increase in commercial differences prior to the revision_____
Differences fixed by the committee___
7. Heavy discount in the contract price after the revision____
8. Abnormal discount in contract price chiefly due to improper
revision -
Comparison of margins between spot and contract prices
in the New York and New Orleans markets in 1906-7‒‒‒‒‒‒
9. Other attempted explanations of abnormal discount in contract
price_
Abnormal discount in Liverpool contract price in 1906-7----
Exceptional conditions which may increase the discount in
the contract price------
10. Contention that effect of errors in differences is automatically
116
119
121
126
129
133
134
137
corrected___---
138
11. Heavy losses resulting from the action of revision committee_.
Losses on hedging transactions.
140
Losses of speculators___.
145
147
Indisposition to hedge in New York market a result of re-
vision of November, 1906
ODIC
CHAPTER IV.—PERIODIC VERSUS COMMERCIAL DIFFERENCES WITH
RESPECT TO THE PARITY BETWEEN SPOT AND CONTRACT
PRICES.
L FREQUENT DISTURBANCES OF MARGIN BETWEEN SPOT AND CONTRACT PRICES UNDER
PERIODIC DIFFERENCES.
Sec. 1. Comparative movements of spot and contract prices at New York,
1880 to 1908........
2. Relation of discount in contract price to grade differences__
3. Effect of revisions of September and November, 1907-----
Revision of September, 1907---
Revision meeting of November, 1907.
4. Summary..
149
157
163
167
169
IL PARITY BETWEEN SPOT AND CONTRACT PRICES BETTER MAINTAINED UNDER COM-
MERCIAL DIFFERENCES.
Sec. 5. Comparison of relative movements of spot and contract prices at
New Orleans, 1880 to 1908-
171
6. Comparison of margins in New York and New Orleans.
175
Disturbances of margin unnecessarily frequent in New Or-
leans...
179
Explanatory note concerning data used in comparisons of
margins...
180