COTTON PRICES AND MARKETS 37 
ceive cotton through a member. There are firms which make a 
specialty of delivering and receiving cotton for clients. _ Other mem- 
bers of the exchange may also hire these firms on commission to han- 
dle this particular phase of their business. 
DEMAND 
The broker who i; stops " a transferable notice must issue to the 
firm issuing the notice what is known as a " demand." It serves as a 
notification to the seller to whom to deliver the cotton. It must be 
stamped and numbered by the secretary of the exchange and re- 
turned to the member issuing it before 4 p. m. (except Saturday at 
2 p. m.) on the day previous to the day delivery is due thereon, and 
shall be accepted as a legal demand for the cotton. 
WHAT MAY BE DELIVERED 
The rules of the exchanges and the cotton futures act specify that 
only good merchantable cotton may be delivered. Its grade must 
be of or within the 10 deliverable grades prescribed by the cotton 
futures act. It must have a staple length of seven-eighths inch or 
longer. 23 If grades other than Middling are delivered, the buyer 
must pay the commercial premiums, or " on,'' for the grades 
above Middling; and he receives the commercial discounts, or the 
;< off," for the grades below Middling. In compliance with the 
United States cotton futures act, the amount of the " on " or 
' ; off " is determined in Xew Orleans by commercial differences pre- 
vailing in that market. In markets like Xew York, where the sales 
of different grades are not sufficiently numerous to establish a spot 
market, the law requires that they shall be made up by taking the 
average of the commercial differences in not less than 5 of the 10 
southern spot markets designated for the purpose by the Secretary of 
Agriculture. These markets are (1924) Augusta, Dallas, Galveston, 
Houston, Little Rock, Memphis, Montgomery, Xew Orleans, Xorfolk. 
and Savannah. 
ELEMEXTS OF GOOD DELIVERY 
The rules for making the physical transfer of the cotton and what 
constitutes a good delivery are set forth at length in the rules of the 
exchange, subject to the requirements of the cotton futures act and 
the regulations of the Secretary of Agriculture. The Xew York 
Cotton Exchange and the New Orleans Cotton Exchange provide 
that the cotton must be in the city in which the market is situated 
and in not more than two approved storage places. The delivery is 
made by handing the purchaser a receipt from an approved ware- 
house for the required number of bales and an invoice of weights, 
grades, and prices. Such receipt must be signed by the warehouse- 
man, indorsed by the member in whose favor it is drawn, and be 
free from any press, warehouse, or insurance charges. The cotton 
must have been inspected, sampled, and weighed by the inspection 
23 U. S. Department of Agriculture Service and Regulatory Announcements No. 91. 
Regulations of the Secretary of Agriculture under the United States cotton futures act. 
In addition to this see also Appendix I of the same, containing the text of the statutes as 
amended. 
