Abstract: Regulating the Future: Conflicting Cotton Exchanges and Progressive Legislation

Bruce Baker and Barbara Hahn

Abstract

This paper traces the Cotton Futures Act of 1914 back to conflicts between the New York and New Orleans Cotton Exchanges early in the twentieth century. In 1903, a bull pool (organized in New Orleans) cornered the world market in cotton. Its principal actors—William Perry Brown and Franklin Brevard Hayne—knew that many New York cotton brokers represented interests that wanted cotton prices low. The bulls also understood the bears' methods: overestimating crop size and thus depressing both spot and futures prices. Brown and Hayne took advantage of short crop years to squeeze the bears, making millions of dollars in the process. Yet crop prices relied not only on supply and demand; they depended as much on grades and information. Pricing the different grades in different ways in New York and New Orleans led each Cotton Exchange to different market mechanisms. In the end, the 1914 Cotton Futures Act made New York policies illegal and thus validated New Orleans practices. Using actor-network theory from science and technology studies and newspapers, government documents, and Brown's unprocessed manuscripts, we trace the roots of legislation to conflicting business practices that had wildly divergent effects on commodity prices.