236 COTTON 



Furthermore you apply this principle in the 

 purchase of all your supplies all needs ; you secure 

 your luxuries as well as your necessities when you 

 think the time and the place are best. 



THE MANUFACTURER'S POLICY 



The manufacturer does likewise. He goes to 

 the market for his supplies at the time when he 

 considers the market at its lowest point. In this 

 the cotton spinner is not different from other men ; 

 if the market points to an advance in price, he will 

 make his purchase now. But he runs a risk; his 

 needs are many, his supplies costly, and prices may 

 not advance; they may even decline. When this 

 turn is taken, loss naturally follows and often to 

 such an extent that all profits are absorbed in the 

 loss. To reduce these risks to a minimum, and 

 also to arrange so that but a margin of the value 

 would be required for protection, contracts were 

 early arranged which allowed a spinner to buy his 

 cotton on the basis of future delivery. This device 

 of trading in contracts for the future delivery of 

 cotton was quickly adopted by the trade, especially 

 by those concerned either with the movement or 

 consumption of cotton. An exceedingly gratify- 

 ing advantage to the spinner was this, for now he ] 

 might estimate the quantity of cotton needed at a 

 certain time, make his purchase on the basis of a 

 future delivery, and in the meantime continue the 

 manufacture and sale of his products. Knowing 

 the amount of the manufacturing expenses, and 

 now just what his cotton in the raw would cost four, 

 six, eight or ten months in advance, he could estab- 

 lish his selling price, make his purchases and his 

 sales, and all the while be relieved of worry over 



