COTTON 239 
market for like deliveries may warrant, which 
margin must be kept good. 
Such is the cotton contract. Legal it is, and 
almost a product in its own right. It stands for 
cotton, but is sold and bought because of itself, 
fluctuating more widely and frequently than the 
real product. 
Since the principle of trading in cotton contracts 
began in its crudeness a quarter of a century ago, 
it has expanded to such proportions that, in the 
words of one of the Exchange members, “during 
the present season it is estimated that the total 
number of bales represented by the options bought 
and sold in the three great markets, is in excess of 
four hundred million, or practically forty times the 
entire American production. ‘This does not mean 
that each bale of cotton has been sold forty times 
over, but it does mean that contracts for the future 
delivery of forty times this year’s crop have been 
traded in.” 
HOW THE CONTRACT WORKS 
While cotton contracts call for the delivery of 
cotton, it is a fact that real cotton is seldom deliv- 
ered. The seller when selling the contract never 
expected to deliver the commodity, and the pur- 
chaser never expected to receive it. In fact, the 
seller did not actually have in his possession any 
cotton at all; and the purchaser, if cotton were 
delivered to him, would not know what to do with 
it. It would not be going too far to say that some 
of these sellers and buyers have never seen a-bale 
of cotton; they might even not know what one looks 
like. 
All of these market features have had to do with 
