CHAPTER IV.

PRACTICABILITY OF A UNIFORM STANDARD OF CLASSIFICATION.

Section 1. Present lack of uniformity.

In the opinion of many members of the cotton trade, much dissatisfaction over the grading of cotton could be obviated if all markets were to adopt a uniform standard of classification. The absence of such uniformity has already been referred to. While the same grade names are used in nearly all markets, they have a widely varying significance in different localities.

The New York Cotton Exchange and the New Orleans Cotton Exchange usually have substantially identical types for white cotton. A member of the New Orleans Cotton Exchange who has frequently served on the arbitration committee on classification, which prepares the New Orleans types, in comparing the New York and New Orleans standards said, in substance:

There is very little difference between our full types and those for the New York exchange in white cotton. New York is slightly lower than our cotton right straight through. Possibly on the good grades they are pretty close; that is, from strict middling up. * * * Good ordinary and strict good ordinary are fair color. Low middling stands a little color; it is not what we call good-colored cotton. Their [New York's] good ordinary white is a different character of cotton. That type is a smoky, bluish cotton, very undesirable for the spinner, who would rather have bright, stained cotton than that dull cotton. It shows that the cotton has been exposed to the elements and the character of staple has depreciated from such exposure. As I told you before, we tried [in 1906] to make our type to correspond to the preceding year as nearly as possible. We make the types out of the current year's growth, types that are to be in use in that year. That is the reason we wait until November to make our types. This comparison is not accepted by some other interests in the cotton trade, and the standards of the two exchanges are generally regarded as nearly identical in most years, although, as already shown, the interpretation of them by classers is not. There is a fairly close correspondence between the standards of these two exchanges and those of a few other exchanges which profess to maintain standards. A considerable number of southern exchanges, it may be noted, do not regularly maintain standards.

On the other hand, there is a very wide divergence between the standards of New York and New Orleans and those of certain other important markets. For instance, middling cotton in Augusta is ordinarily quoted at from a half cent to a cent a pound above the middling of Savannah, whereas naturally the same grade at Savannah should command a premium over the price at Augusta to cover the increased cost of shipping the cotton to the former point. This apparent discrepancy is mainly due to the fact that the middling cotton of Augusta is a decidedly higher grade than the middling cotton of Savannah, and, for that matter, of most other American markets. It should be noted, moreover, that Savannah, being primarily an export market, has seen fit to adopt the Liverpool classification. The Liverpool standards vary considerably from those of New York, the high grades in the Liverpool classification being generally somewhat lower than the corresponding grades at New York, while the lower grades at Liverpool are distinctly better than the corresponding grades in the New York classification. There is comparatively little difference with respect to middling itself, but the middling of New York is generally regarded as a rather better style of cotton than the middling of Liverpool. The relation between the Liverpool and New York standards is indicated by the following excerpt from a letter from the secretary of the Liverpool Cotton Association, of March 17, 1890, to the New York Cotton Exchange, in regard to a comparison made of the standards of the two exchanges:

The four last-mentioned standards are apparently of Gulf cotton, and are uniformly bluer and more leafy than the Liverpool standards."

This comparison of the New York and Liverpool standards is not fully accepted by the cotton trade, but, as above stated, the low grades in the Liverpool classification are generally conceded to be better than the corresponding low grades in the New York classification, while the reverse is true of the high grades.

Following is a comparison of various grade types for the Augusta, Liverpool, and New York markets, as made by two of the largest cot

• In the list New York low middling is pronounced whiter than the Liverpool type.

ton merchants in Augusta. These merchants disagreed as to the interpretation of the New York standards in the case of several grades, and in such cases the views of both are therefore given, being distinguished by the letters (a) and (b).

COMPARISON OF GRADE STANDARDS OF AUGUSTA, LIVERPOOL, AND NEW YORK.

The above comparison can not be regarded as official or conclusive, since it simply gives the views of two merchants, who, moreover, it will be seen, differed in their opinions of certain grades.

There is as a rule a closer correspondence between the standards or types of middling cotton than between those for other grades, although from what has been said it is clear that the standards of different markets for middling cotton itself are by no means identical, even with respect to superficial appearance. In some other respects there are wide divergences in local standards, even for middling. Thus, middling cotton from the Mississippi delta district, while in superficial appearance similar to that in eastern parts of the cotton belt, would show marked differences with respect to the length of staple, the "body," and other characteristics. In the same way, middling cotton from certain sections of Texas and Oklahoma is a decidedly different product from the middling of Arkansas or Mississippi.

With respect to the grades other than middling, the divergence in local standards is at times pronounced.

The present confusion in the so-called standards of various markets is emphasized in a number of statements obtained by the Bureau from representative cotton men. A merchant of Greensboro, N. C., said:

Cotton from different sections represents different values. For instance, middling cotton from Mississippi is given prefer

* * *

ence over middling cotton from Georgia, and middling cotton
from Georgia will bring a higher price than middling cotton
from North Carolina. That is owing not only to a difference in
staple but in the general character of the cotton-what we call
the "body" of the cotton.
The Mississippi cotton,
for instance, has the heaviest body and strongest fiber of the
cotton of any State east of the Mississippi River, unless it be
Louisiana. Georgia cotton has about the same body as Caro-
lina cotton, but better staple. But the grade of the cotton is
not determined by the staple nor the body of the cotton, but by
its character as to cleanliness and color.

An operator in the New York market said:

At the present time different standards prevail in all the more important cotton markets of the world. The Liverpool standard is not identical with the New York standard, and neither of them agrees with the New Orleans standard. In the less important spot markets standards vary widely. The standard of middling in Augusta, Ga., is much higher than the standard in Savannah-less than a night's journey away; the standard for middling in Charleston differs widely from the standard of middling in Norfolk. The difference in standards even between Houston and Galveston, only some two hours apart, is palpable. Another merchant said:

I would rather have strict good ordinary cotton from Memphis or Natchez, or from Vicksburg or Helena, or practically any of the southwestern markets, at three-fourths of a cent a pound more than if it came from Columbia, S. C. If I had an offer to-day [October, 1907] of a hundred bales of strict good ordinary cotton from Memphis at 9 cents a pound, I would buy it, but if I had an offer of 8 from Columbia I do not think I would buy it.

Section 2. Evils resulting from lack of uniform standards.

ALLEGED INJURY TO COTTON GROWERS.—This lack of uniformity in standards of classification necessarily results in conflicting quotations in different markets. As just pointed out, middling cotton in Augusta is usually quoted distinctly higher than that grade in Savannah, whereas, logically, Savannah should be the higher market. This condition is more or less common among local markets throughout the cotton belt. Such lack of uniformity in grading, and the consequent absence of correspondence between quotations for the different markets, have, in the opinion of some cotton growers, caused extremely heavy loss to the cotton producer. The cotton planter, and particularly the small cotton grower, have only rough ideas of the grading of cotton in the leading markets, whereas the larger cotton buyers, who are familiar with the types of the different markets, are able to translate the standards of one market into those of another

and thus have an advantage in dealing with the producer. In this connection a cotton merchant of Dallas, Tex., said, in substance:

*

In many interior towns there are unscrupulous and dishonest buyers who habitually grade the farmer's cotton too low. Cotton is often shipped from the interior to some central point subject to the buyer's classification, and sometimes controversies arise over this classification. * There is no doubt that the farmers in many sections are absolutely robbed year after year by unscrupulous buyers, and something is needed to cure this evil. The present system of buying is calculated to deceive the uninformed farmers.

A New England manufacturer who had formerly spent many years in the spot-cotton business in the South said:

A uniform standard would be a particular advantage to the southern planter. In my opinion the southern cotton planter is swindled out of millions of dollars every year because of his lack of knowledge of grades. Just after the war I spent twenty years in the spot-cotton business in New Orleans, and I have been told that in some sections there were only two grades of cotton, known as "good" and "sorry," and the planter sold his cotton under one of these classes. The average cotton farmer is no judge of cotton, and if there were an established standard with which he might familiarize himself, there is no doubt but that he would profit thereby.

A cotton merchant of Montgomery, Ala., said, in substance:

An evil has grown out of the lack of uniform classification that seriously affects the farmers. One local market will make its standard higher than another and thus open the way for a better nominal price than a near-by competing one, while in fact the price is really less. Cotton merchants of Selma, Ala., for instance, are in the habit of grading their cotton close and offering the farmer more than the market price for middling in a small nearby market where cotton is differently graded, and a farmer is made to believe he receives a certain price for middling cotton when as a matter of fact his cotton should grade above middling. In considering charges that the grower of cotton has thus been victimized, it must be remembered that competition in the buying of cotton often is keen, and that representatives of several buyers are ordinarily found during the active crop season at nearly every country town of importance. It is a common thing for several such buyers' agents to bid on the small lots of cotton which the farmer brings to market; so that it does not necessarily follow that, because the farmer is not well informed as to the exact grade of his cotton, he does not get substantially the market price for it.

In this connection a member of the New York Cotton Exchange said:

From an experience of about sixteen years in the cotton business in Mississippi, I never saw that a farmer needed any guard