66 BULLETIN 1444, U. S. DEPARTMENT OF AGRICULTURE 
in unclassed lots. In the winter and spring these are small. The 
bulk of transactions in winter and spring are sales of even-running 
cotton by merchants to mills. 
The following resolutions adopted by representatives of 10 spot- 
cotton markets, to obtain correct differences, show the typical ma- 
chinery used to collect differences and the plan for obtaining the 
necessary facts: 
(1) Resolved, That the responsibility for quoting different grades to Wash- 
ington rests with the quotation committee. 
(2) Its composition. — Committee of five composed of two buyers and two 
sellers, appointed by the president for two months, one buyer and one seller 
to be replaced every 30 days; also a chairman, appointed by the president, 
who shall serve for 30 days and be alternately a buyer and a seller. 
New Orleans reserves its present system. 
(3) Method of obtaining facts. — Buyers and sellers report daily to super- 
intendent of exchange all purchases and sales with prices of each grade. 
If purchase or sale is of average grade buyer and seller must report to the 
best of his knowledge and belief the value of each grade. This information 
furnished the superintendent is strictly confidential and his duty shall be 
to report to the quotation committee an average price of various grades 
bought and sold, also the total number of bales traded in. The committee 
shall have the discretion to decide whether the total transactions are too 
small to base quotations on and they shall also have the power, if the quota- 
tions seem to be at variance with the actual transactions, to demand from the 
superintendent that he furnish them with a list of the transactions from which 
his figures were derived. If the transactions are so small as to make, in the 
opinion of the committee, a purely nominal market, the committee shall 
request the superintendent to secure bid and ask price on each grade from the 
various buyers and sellers, and the superintendent shall figure the average 
price of each grade from the average bid and ask price on 50 bales or more. 
It is understood that when any sales of spot cotton are made and such, in 
the opinion of the spot committee, are made for the purpose of influencing 
(if possible) the spot quotations; or, any sales which do not represent true 
market value — then such sales are not to be considered by the Committee 
in making spot quotations. 
When a basis trade is made the buyer and seller must agree, for the 
purpose of getting the average quotations only, upon the approximate amount 
of each grade to be contained in the same. 
In addition, an official of the Bureau of Agriculture Economics 
visits the spot markets from time to time for the purpose of check- 
ing the reported differences, to see that the}?- are the true and actual 
differences obtaining in bona fide transactions. 
Figure 14 shows the differences for grade and color in the New Or- 
leans market from September 1, 1923 to January 1, 1924. 
These systems of arriving at differences have not been entirely 
satisfactory, but they are subject to improvement and no other system 
gives promise of being more satisfactory. The difficulties lie chiefly 
in administration. The problems of arriving at true commercial 
differences for different grades increase greatly as the number and 
size of transactions decrease. Cotton with extreme qualities, whether 
of grade, color, staple length, or character, tends to be a specialty. 
An attempt to quote commercial differences for such classes for de- 
livery on future contracts would tend to depress the value of such 
contracts whether they were overvalued or undervalued. The very 
fact that they were deliverable would increase the buyers' risks. If 
they were overvalued the price of contracts would be lowered ac- 
cordingly. To prevent the misalignment of spots and futures, it 
is necessary to have only those grades deliverable which are readily 
