38 BULLETIN 1444, U. S. DEPARTMENT OF AGRICULTURE 
bureau of the exchange, the first two operations being subject to the 
regulations of the Department of Agriculture. All warehousemen, 
pressmen, assistant inspectors, weighers, and samplers must be 
licensed or approved by the board of directors. These licensees are 
under the direct supervision of committees appointed by and respon- 
sible to the board of directors. At least one member of the board 
must be on each committee. The warehouse receipt must be accom- 
panied by a certificate of grade and staple issued by the United 
States Department of Agriculture for the exact bales represented in 
the warehouse receipts. Not less than 49,500 pounds or more than 
50,500 pounds can be delivered against any one contract. If the 
cotton has not been certificated and is delivered on a seller's validated 
notice of grade pending formal certification, the receiver pays only 
90 per cent of the price and deposits the balance with the secretary 
of the exchange for final settlement. 
SETTLEMENT PRICE FOR COTTON DELIVERED ON FUTURE CONTRACTS 
At the close of each day the superintendent of the exchange must 
post on the bulletin of the exchange the price at which transferable 
notice shall be issued on the following day. The price for Middling 
must be within 10 points of the closing price for like deliveries. 24 
On receipt of the warehouse receipt and certificate of grades, the 
buyer must at once give the member presenting same a certified 
check for the cotton at the price of the transferable notice, with 
additions or deductions for grades delivered above or below Mid- 
dling. These differences are those quoted the day prior to issuance 
of transferable notice, or six business days prior to the date of 
delivery. 
The settlement price for Middling is not the one stipulated in the 
original contract, but the seller receives the original price in the 
fofm of the settlement price, plus or minus differences which have 
been received or paid in clearing-house balances. The nonmember 
making delivery receives through his broker the original contract 
price for Middling. In case he has lost in the trade, he evens his 
position with the broker by forfeiting margins. Differences " on " 
and " off " for grades are determined in the same way for the non- 
member as for the member. 
COSTS OF DELIVERING COTTON ON FUTURE CONTRACTS 
The costs for delivering cotton in liquidation of future contracts 
vary from time to time and according to whether the deliverer is 
a member of the exchange. 
The number of future contracts liquidated by the delivery of spot 
cotton varies from year to year and from month to month. Cotton 
may be delivered on contract because prices of contracts are forced 
above the value of spots by what is known as a " squeeze." The 
holder of a particular lot of cotton may not be able to make a satis- 
factory sale of it in the spot markets and may close it out by de- 
livery. It may be delivered for the purpose of more readily bringing 
about price adjustments; that is, a large volume of spot cotton 
2i New Orleans exchange rules, 1920, p. 99. 
