COTTON PRICES 
These futures markets differ slightly among themselves in certain 
respects. The New York Cotton Exchange requires delivery to be 
made in New York. The New Orleans Cotton Exchange allows de- 
livery to be made either in New Orleans or in Houston or Galveston. 
The Chicago Board of Trade allows delivery to be made in Houston 
or Galveston. 
Trading in the futures exchanges, as I have indicated before, is of 
a much more specialized nature than in the spot markets. The rules 
and regulations of the exchanges specify the form and conditions of 
the contract to be used between buyer and seller. 
Senator SmiTH. Is it not well to state right in this connection that 
the future markets, principally New Orleans and New York, deter- 
mine the price current in all the markets that you have indicated 
here as primary and principal spot markets? 
Mr. PALMER. Yes; I think it is an accurate statement to say that 
the function of the futures markets is such that for the most part 
they determine the price level of cotton and, as I shall try to explain 
a little later, the prices paid and received for spot cotton in the spot 
market, even down into the primary market, are based to a large 
extent on the prices at which futures contracts are negotiated in one 
or another of these futures markets. 
Senator Frazier. I would like to have a little explanation as to 
how the New York Exchange and the New Orleans Exchange do 
regulate the price or fix the market price. 
Senator Smita. That is one of the things we expect him to go into 
[ully in setting forth his administration of the cotton futures act, to 
give us the details as to how these cotton futures markets affect and 
fix the price of cotton throughout the country. 
Mr. PaumEer. I did not mean, Senators, to imply, and I do not 
think it would be proper to say, that the futures exchanges as insti- 
tutions, fix the price of cotton. The exchanges as institutions deter- 
mine the rules and terms of their contracts, subject, of course, to 
their legal limitations. 
Senator HEFLIN. They furnish the machinery for somebody else to 
fix the price? 
Mr. PauMER. They furnish the machinery for trading and the 
prices at which contracts for the purchase and sale of cotton are 
made are quoted on the exchanges. 
Senator RansperLL. They rather register the price than fix it? 
Mr. Parmer. The prices that are quoted on the exchanges and 
registered by the exchanges are the prices at which the buyer and 
seller transact business across the ring—the trading arena of the 
sxehange. 
Senator SmiTH. Let us get our terminology so that anybody may 
understand it. We might not use the word “fix,” but whatever 
price is finally determined by buyer and seller on the exchange gov- 
erns the price practically throughout the country? 
A Mr. PaLMER. Yes. It is the price upon which spot prices are 
ased. * 
Senator Smite. It has a controlling influence over the American 
sotton market? 
Mr. PALMER. Yes; I think it is not too much to say that it has. 
Senator Smita. All right. 
Senator CappER. Who announces what that price is to be? Who 
passes on that very important phase of the transaction?