238 COTTON 



the option of the seller at any time during the month 

 for which it is sold, and they are called futures, 

 because, as a rule, the contracts traded in are those 

 which call for a delivery of the cotton at some fu- 

 ture period." 



COTTON CONTRACTS 



The contract of the Cotton Exchange is in essen- 

 tials a legal sale and purchase of cotton like other 

 contracts, written or verbal, which call for a change 

 in the ownership of any commodity. The cotton 

 contract stipulates in writing that 50,000 pounds 

 in about one hundred square bales are sold or 

 bought, as the case may be, at a stated price, pay- 

 ment to be made at or before some specified future 

 period, usually at the end of the calendar month. 

 One of the stipulations of this kind of contract is 

 that the cotton must be delivered within the month 

 and the buyer must receive and pay for it. There 

 is no option about the contract except as to the 

 time the seller may fulfill it. The New York con- 

 tract calls for the delivery at the seller's option upon 

 three days' notice to the buyer, the delivery to be 

 made from one warehouse. The New Orleans 

 contract gives the buyer five days' notice of delivery 

 and allows the seller to deliver from cotton presses 

 and railroad depots, and from two places. These 

 contracts are made on the basis of Middling Up- 

 lands ; when the cotton is of better grade, a higher 

 price is paid by the purchaser rand a lower price, 

 of course, if the staple be below the market grade. 

 Thus, on the face of the contract, any sort of cotton 

 between Fair and Good Ordinary may be delivered. 

 Another feature of the contract is the right of either 

 party to call for a margin as the variation of the 



