The organization of produce exhanges in the United States

Front matter

+ M i kaimi

THE ORGANIZATION

OF PRODUCE EXCHANGES IN THE UNITED STATES

Introduction

THE ORGANIZATION OF PRODUCE EXCHANGES IN THE UNITED STATES

In the last half century, produce exchanges in this country have developed rapidly as one of the most important economic institutions. They have grown in response to new conditions created by vast industrial and commercial enterprises. At the same time,, the tremendous development of transportation and communication facilities has greatly increased their importance. Today, in most civilized nations, produce exchanges are established in order to facilitate not only the local and national, but also the international distribution of commodities.

In order to illustrate the importance of the exchanges, we may take some of the statistical data contained in the reports of the various exchanges. According to the figures given in the annual reports of the Chicago Board of Trade, * the total receipts of the six leading articles (flour, wheat, corn, oats, rye, and barley) at the principal western primary markets (Chicago, Minneapolis, Duluth, St. Louis, Milwaukee, Kansas City, Omaha, Peoria, Toledo and Detroit) amounted to over one billion bushels in 1915. This amount of receipts has never been exceeded in any previous year in the history of the exchanges. The receipts of these articles at the above primary markets have been steadily increasing. In 1890 the amount was nearly five hundred million bushels; in 1900, it increased to over seven hundred million bushels;

1 Annual Report of the Chicago Board of Trade. 1915: pp. 54-5.

and, two y9ars previous to the present European War, it amounted to a little less than eight hundred million bushels. The rapid increase in production and consumption of these articles in this country is shown by the steady augmentation of receipts at these markets. Further, the tremendous amount of receipts in 1914 and in 1915 must have bean due to the large demand of European nations resulting from the present war.

Produce exchanges are indispensable factors for the importation and exportation of agricultural products. For the exportation of grain and provisions, the New York Produce Exchange has been most important. For the cotton exporting trade, the New Orleans Cotton Exchange has been a great factor; while the New York Coffee Exchange is the only existing exchange in this country for coffee. According to the figures given by the New York Produce Exchange, the amounts of wheat and corn exported from New York in 1910 were nearly nine and a half million and eight million bushels respectively; in 1912, wheat exports increased to the large amount of over thirty eight million bushels while corn decreased to five; in 1914, wheat exports were over forty millions and corn nearly four million bushels; and in 1915, wheat exports rose to above ninety million bushels and corn approximately ten million bushels .

Regarding the importance of the produce exchanges, Professor Weld says: "On the whole, the produce exchanges represent the highest type of organization and the highest development of efficiency in marketing that can be found." He further adds: "Cooperation of merchants through exchanges brings about a higher degree of standardization of methods and

These figures taken from the annual statistical reports of the New York Produce Exchange. 1915.

commodities, elevates the plane of commercial ethics, develops a greater degree of efficiency among members and hence tends to reduce the cost of marketing. "1

The purpose of this paper is to study the organization of those American produce exchanges which are establishsdin primary markets and in seaboard markets, and in which "future" transactions are carried on. There are, however, numerous so called "exchanges" whose chief function is to furnish a place for the cash transactions and to facilitate trade in the local community. Our main study will be confined to the discussion of the American produce exchanges whose development and significance have been the most striking phenomenon in the history of the world's produce exchanges. A resume of ths activities of the Japanese produce exchanges will furnish a supplementary chapter.

The terms "chamber of commerce", "board of trade" and "produce exchange" in this country are used interchangeably owing to their resemblance. Yet, it must be noticed that these names may be used to designate bodies widely differing in the extent of their purposes and activities. ^ For example, the New York Chamber of Commerce was not established as a market place for the exchange of commodities, but was established for the purpose of promoting the general commercial, industrial and financial interests of the City of New York and the State of New York as a whole. On the other hand, although having the same name, the Chamber of Commerce of Minneapolis and the Milwaukee Chamber of Commerce are entirely different from the New York Chamber of Commerce in their purpose

1Prof. Weld: "Marketing Farm Produce", p. 283. 2Bisb©e and Simonds "Law of Produce Exchanges", p. 23.

and their business activities. They were established for the purpose of giving a market place for those who desire to meet with the view of transacting business. Furthermore, what is known as "Board of Trade" in Minneapolis has been understood to be the same as the New York Chamber of Commerce, or the Philadelphia Board of Trade. Finally even though their names are different the Chamber of Commerce of Minneapolis, the Chicago Board of Trade, the New York Produce Exchange and the St. Louis Merchants' Exchange, are to be considered as similar commercial exchanges in their nature and functions.

In this paper, the term "produce exchange" will be used as a representative name of various commercial exchanges. We may classify these commercial exchanges under two divisions: (1) general produce exchanges^and (2) special produce exchanges. Under the general produce exchanges, the Chicago Board of Trade, the New York Produce Exchange and the St. Louis Merchants' Exchange, etc., are included. These exchanges are established as a market place for general agricultural products, such as wheat, corn, oats, lard, pork, etc. On the other hand, under the special produce exchanges, the New York Cotton and Coffee Exchanges, the New Orleans Cotton Exchange, the New York Metal Exchange and similar kinds of exchanges are included. The New York Coffee Exchange is provided for the coffee trade only1 and the New Orleans Cotton Exchange in like manner is organized for cotton transactions exclusively.

The New York Coffee Exchange now includes sugar trade and is named as "The New York Coffee and Sugar Exchange".

Lastly, these produce exchanges are to be carefully distinguished from those corporations organized primarily for the purpose of realizing pecuniary gain from the immediate use of the corporate wealth, for instance,, such as banking,, insurance, manufacturing, and railroad companies. The produce exchanges are usually prohibited by their charter from transacting any business^ excepting such as is strictly necessary to the management of their peculiar affairs. Profits and accumulations of money or property are not authorized to be divided among the members as is the case with share holders in other corporations. In short, the exchanges as such, are not organized for profit, but are established as a market place for the members who wish to transact business.

Chapter I History Of Produce Exchanges

Modern produce exchangee are essentially the product of the 19th century although their origin may be traced back several centuries. Out of the "fairs" of antiquity, there arose the "exchanges". During the 17th and the 18th centuries, these exchanges came into existence in England and other European countries. The names of the Royal Exchange of London, the Antwerp Bourse and some other similar organizations in France and in Germany, which were established during the same period, are generally familiar.

The American produce exchanges, in the modern sense, did not appear until the middle of the 19th century, as was also the case in European countries. Previous to the discussion of the organization and history of these exchanges, it may be worth while to mention some of the most important factors which have been responsible for the growth of these distributing agencies.

One of the chief factors which led the establishment of these exchanges and increased their importance so greatly is the rapid growth of population in this country and the concentration of population in large cities. This increase in the population of our cities has made a large proportion of our people dependent upon theseagencies for the distribution of agricultural products. In consequence, produce exchanges as a medium of distribution have become necessary. The following table shows the increase in population in this country as well as in some of the larger cities from 1860 to 1915.

Years Population of U.S.1 New York1 Chicago1 Philadelphia-

31,443,000

813,000

109,000

565,000

38,558,000

942,000

298,000

674,000

50,155,000

1, 206,000

503,000

847,000

62,947,000

1,515,000

1,099,000

1,

046,000

75,994,000

3,437,000

1,698,000

1,

293,000

91,972,000

4,766,000

2,185,000

1,

549,000

19152

100,399,318

5,468,000

2,447,000

1,

683,000

Nearly one-tenth of the total population of the United States^ exclusive of outlying possessions^ in 1910 resided in the three cities - New York, Chicago, and Philadelphia. In 1880, only 2.4 per cent of the population resided in cities of over one million inhabitants, while in 1910, this proportion has increased to 9.2 per cent^. Cities of over 100,000 inhabitants together contained a little over 12 per cent of the population in 1880 as compared with .22 per cent in 1910; and 46.3 per cent in 1910 of the population lived in towns and cities of 2,500 or over. The increasing need of distributing agencies or the produce exchanges is thus apparent.

With the increased division of labor and specialization of production has come a tremendous increase in the production of agricultural commodities and a great development in manufacturing and commerce. A brief review of the growth of agricultural production is important

U.S. Census 1910: vol. on Population, pp. 82-83. Statistical Abstract 1915, p. 25.

The 13th Census of the U.S. Population. 1910. p. 65.

in understanding the rise of the modern produce exchanges. These agencies have become necessary,, not only for domestic distribution, but also for the distribution of our surplus products in the world market.

According to the Census of 1900, the total acreage of farms in this country was estimated at over 400,000,000 acres in 1860; 526,000,000 in 1880; 841,000,000 in 1900; and in the Census of 1910, this amount for the year was 878,000,000. The total production of all cereals was 1,242,000,000 bu. in 1859; in 1869, 1,388,000,000 bu.j in 1889, 3,520,000,000 bu.; in 1899, 4,434,000,000 bu., as against 4,512,000,000 bu. in 1910. Of the most important cereals - corn, wheat, oats - there were produced in 1850, over 592,000,000 bu., 100,000,000 bu. and 146,000,000 by. respectively; in 1870, these figures increased to 760,000,000 for corn, 287,000,000 for wheat and 282,000,000 of oats. In 1900, corn production increased to the enormous amount of 2,666,000,000 bu.; and wheat production to 458,000,000 bu., while oat production also increased by 943,000,000 bu. The average production of the six years from 1910 to 1915 of each of these articles was approximately 2,800,000,000 bu. of corn, 770,000,000 bu, of wheat and 1,360,000,000 bu. of oats1. There has also been an increase in cotton production. In 1849, approximately 2,500,000 bales (400 pounds per bale) were produced; in 1869, 3,011,000 bales (440 pounds per bale); in 1889, 7,500,000 bales (477 pounds per bale); in 1899, 9,534,000 bales (495 pounds per bale); in 1910, over 11,500,000 bales (500 pounds per bale); and for the period 1911-1914, the average production has been estimated at about 15,000,000 bales

Report of the Chicago Board of Trade. 1915.

(500 pounds per bale)^.

In short, in consequence of the introduction of machinery, improved methods and increased farm acreage since the Civil War, the total agricultural production of the United States has increased enormously.

The distribution of such amounts of agricultural commodities has been made possible by the development of our modern transportation and communication systems. In 1859, there were only about 8,500 miles of railroad which served only a small section of the country. In 1914 our railway net had extended to over 279,000 miles, connecting all the producing regions with the consuming and distributing centers. During the same period there was also some development of inland water transportation, but most important has been the growth and improvement of ocean transportation. Ocean transportation has made possible a more effective distribution ovor a large area and stimulated production in this country for foreign markets. Co-incident with this transportation development, have come the improvements in the means of communication such as ocean cables, the telegraph and the telephone.

In the distribution of agricultural commodities all of these factors are of great importance. They have made possible the modern produce exchanges. We may, therefore, conclude that the modern produce exchanges are the necessary outcome of the rapid increase in population and of the development of agriculture, commerce, manufacture, transportation, and communication.

^United States Census of 1900 and 1910 and also United States Census Bureau, Cotton Production.

Thus, the New York Produce Exchange, the Chicago Board of Trade and the St. Louis Merchants' Exchange came into existence before the Civil War although their great business expansion took place after the great struggle. The New York Cotton Exchange, the New York Coffee Exchange, the New Orleans Cotton Exchange, the Minneapolis Chamber of Commerce, the Commercial Exchange of Philadelphia, the Duluth Board of Trade, the Kansas City Board of Trade, and others were founded one after another during the seventies, eighties, and nineties.

The immediate necessity for the exchange which has been previously mentioned, was created by the rapid increase in the volume of trade. This led to the establishment of rules and regulations for systematic trading. The history of produce exchanges in this country may be best illustrated by the study of the evolution of the New York Produce Exchange which is the descendant of previous commercial associations.

As the oldest commercial organization in this country and as the pioneer of the present New York Produce Exchange, there was established in the latter part of the 17th century an organization known as the "Exchange". In 1752 the "Royal Exchange" or the "Merchants' Exchange" was created on the same site of this "Exchange"^. These exchanges had been used as a general market place for all sorts of commodities. Their functions and activities were insignificant compared with those of the present exchanges. Organized speculation had not yet been introduced and cash transactions were most important .

Annals Amer. Acad., vol. 38, pp. 213-14.

During the Revolutionary War the "Royal Exchange" and the "Meal Market" which had been organized for some time, passed out of existence. However, the necessity of such commercial exchanges in the City of New York to meet the increasing demand for American foodstuffs on the part of European nations and a rapid increase in population in New York aroused the business men of that city to the need of reorganizing the exchange and of establishing it in large and convenient permanent quarters. In 1861^ the new association was created under the name of the "New York Produce Exchange Company""!"

This body became known as the "New York Commercial Association" and received its charter in 1862. In 1868 the name was changed to the "New York Produce Exchange". In short, the history of the New York Produce Exchange shows the evolution of the modern exchanges from various commercial bodies which came into existence from time to time to meet the growing commercial requirements.

With its natural advantages of location and its position as the financial center of the country, the 6ity of New York developed rapidly. Coincident with its business growth is the development of the New York Produce Exchange. The following tables of the amounts of receipts and exports at and from New York of the most important articles (wheat, corn, oats) will serve to indicate the importance of the Exchange during the period 1862-1915.

Annals Amer. Acad., vol. 38, pp. 212-14.

Receipts^ in bushels

Years

wheat

Com

Oats

T QC O

O fJ rtr A AAA

27,069,000

T f? OOA AAA

17, 290,000

C 1 CI AAA

5, 151, 000 n o oi ^ AAA

23, 913, 000

A OOA AAA

9, 230,000

ft £ OT AAA

9, 621,000

T O OA

CA vl A O AAA

59, 492, 000

£T a f7 £ aaa

61, 076,000

TO ft O (7 AAA

13, 997,000

T C f? A >1 AAA

15, 794, 000

A O C T AAA

34, 261, 000

<5ft F7 >l AAA

33, 744, 000

T ftAA

OT Ol O AAA

31, 812,000

47,077,000

o o n O W A A A

T OT A

T £ ^4 T O AAA

16,413,000

TO O O C AAA

12, 285, 000

O O T T C AAA

23, 115, 000

T OT T

OO At\C AAA

28, 406,000

T /* A£T AAA

16, 061, 000

O Vl /• CI AAA

24, 651,000

T OT O

45, 976, 900

(7 /I /* O AAA

7, 463,000

o / Ten AAA

24,152,000

CO A 17 A AAA

52, 979, 000

T A OAyl AAA

OA O O O AAA

CA CI d AAA

50, 516,000

T A ^ OC AAA

14, 086, 000

O f7 r»AA A ^ A

99,342,000

14,383,000

38,382,000

Exports^ c

*

26, 362,000

T T OAT AAA

11, 891, 000

0£ A AAA

260, 000

T O *7A

TO /I A A AAA

18, 444, 000

A C. A AAA

469, 000

O O AAA

28, 000 r T ftAfl A A A

>i A O f7 O AAA

49, 878, 000

A O f7 AAA

TO C ft AAA

12, 549, 000

r\ A CCA AAA

24, 550, 000

ft OAT AAA

9, 301,000 m O 1 A AAA

21, 934,000

A O £ A c AAA

43, 645, 000

T y| COT AAA

14, 591,000

A O <7 O AAA rj ri 1 AAA 7, Oil, 000

T £ H AAA

1, 621, 000

OA CF7T AAA

20, 571, 000

TO AOC AAA

12, 085, 000

T O O O A OA

1, 822,000

O O O >1 A AAA

38, 240, 000

C f~\0 A AAA

5, 074, 000

C ff r\ A AAA

5, 704,000

A O AT A A A. A

49,019,000

C O C O A "> A

J O O O AAA

4, 382,000 a r\ OCA AAA

40, 859, 000

O AT A AAA

3, 910, 000

T A C /• O AAA

10, 568,000

91,907,000

9,687,000

17,559,000

1 and 2ijnnegQ figure are taken from annual statistical reports and annual reports of the New York Produce Exchange.

Thus the importance of the New York Produce Exchange as a distributing agenc7 has become mors and more significant with the growth of the City of New York. Observing these figures of both receipts and exports at and from New York, we conclude that from approximately 80 to 90 per cent of wheat and more than one-half of com and oats received at New York have been for the purposes of export.

The Chicago Board of Trade was first organized in 1848 as a voluntary association of merchants. At that time Chicago had only 25,000 inhabitants, and had neither railroads nor any other highly developed transportation and communication facilities. In 1859, however, agricultural and commercial expansion finally led to the granting of a charter by the General Assembly of Illinois. By-laws, rules and regulations were prepared at the first meeting, and a general invitation was extended to merchants to meet daily at the rooms of the Association^-.

Since its incorporation the rapid increase in population of Chicago as well as of the whole country, the growth of transportation and communication systems and production of agricultural commodities directly stimulated and helped the tremendous business development "of the Board of Trade. Furthermore, the natural advantage of location both as to water and rail transportation, and as a consuming and shipping center of the vast agricultural territory in the Middle West, also assisted in the expansion of the Association. Today the Chicago Board of Trade has become one of the largest produce exchanges and the largest grain exchange in

Annals of the Amer. Acad., vol. 38, pp. 191-2.

this country.

The rapid increase in its vcflime of trade and it3 value is shown in the following tables:

Total Clearances of Balances for Years

Years

Total Clearances

Balances

$62,227,000

'■22,821,200

83,590,000

27,668,000

99,101,000

31,999,000

43,480,000

16,784,000

78,539,000

26,667,000

94,167,000

31,660,000

70,338,000

24,687,000

55,786,278

19,011,000

26,145,000

118,417,845

41,123,008

So far as has been ascertained, the total volume of trade both in the "cash" and the "future" transactions is not available. However, the above amounts of clearings on future transactions, which constitutes a large part of business transaction on change, gives some idea of the growth of business of the Chicago Board of Trade.

The following table shows the aggregate receipts and shipments of flour and all kinds of grain in Chicago for the period 1860-19151 :

These figures are taken from the annual reports of the Chicago Board of Trade fcr several years.

Year 8

Receipts in bushelsl

Shipment s in bushel I 1

37, 235

31,108

60,432

54, 745

165,855

154,377

223,320

204,674

349,637

265,552

294,858

214,601

291,267

221,429

322,008

244,423

383,494

274,286

416,872

316,293

371,135

299,090

Thus the

rapid increase in receipts

and in shipments at and

from Chicago of these articles and the steady augmentation of business transactions are strong evidences of importance and indispensability of the Chicago Board of Trade as a factor in distribution of agricultural commodities.

Other exchanges such as the Chamber of Commerce of Minneapolis, Euluth Board of Trade, the St. Louis Merchants' Exchange, the New York Cotton Exchange, the New Orleans Cotton Exchange, the New York Coffee Exchange, have had a similar development.

In thousands of bushels.

CKAPTER II THE PRESENT ORGANIZATION OF PRODUCE EXCHANGES

A. Charter or Articles of Incorporation Produce exchanges are generally chartered in this country either under the general laws of state or by a special legislative enactment. Formerly charters were granted by special acts, but today the greater number of produce exchanges and corporations are organized under state laws of general application. Organized under the general laws of state are the Chamber of Commerce of Minneapolis,, the Duluth Board of Trade, the Omaha Grain Exchange, the New Orleans Cotton Exchange, and others. The Chicago Bo^rd of Trade, the New York Produce Exchange, the New York Cotton Exchange, the New York Coffee Exchange, and the Milwaukee Chamber of Commerce are organized under special legislative acts.

Powers which are given bjr a Charter or Articles of Incorporation. Produce exchanges as other corporations are given by their charter some corporate name, power to adopt a common seal with the right to alter the same at pleasure, to sue and to be sued^to plead and to be impleaded ^to take and hold by gift, grant, purchase, and devise, both real and personal property to an amount specified in the respective charter, and to dispose of the same by sale, lease, or otherwise, and power to adopt such rule§ regulations and by-laws as may be deemed necessary for self government^-.

See charter in Report of Chicago Board of Trade, or charter of any other produce exchange.

It should be noted that such rules, regulations and by-laws are conditioned by the laws and constitutions of the state and of the United States*. Thus the amount which is specified in the charter of the Chicago Board of Trade for the real and personal property at present (1915) must not exceed $200,000, while that of the New York Produce Exchange is limited by the amount of $1,500,0002.

There are several items which usually are prescribed in the charter. These are the number of officers and method of electing them, of admitting and dismissing members, of constituting or appointing the committees of arbitration and appeals, and of requiring a bond for officers.

Sometimes, as is the case of the New York Produce Exchange and the Milwaukee Chamber of Commerce and some other exchanges, but not the Chicago Board of Trade, the charter confers the power to convert the surplus money and property of the association into a gratuity fund for the benefit of members, or for their widows and heirs; and furthermore, these exchanges are authorized to assess a fixed amount to each member, the same to be paid as a death benefit. For this matter, the New York Produce Exchange and others provide several articles in their charters and by-laws 3 .

The charter also creates the power to execute awards and findings declared by the committees of arbitration and appeals. This is the case

■••Bisbee and Simonds : Law of Produce Exchange. 2

Annal report of the New York Produce Exchange. 1915. Charter. 3See: Reports of the N.Y.P.E. Charter.

of the Chicago Board of Trade, the New York Produce Exchange, and some other exchangee. Smaller exchanges organized under the general laws of the states such as the Minneapolis Chamber of Commerce, the Duluth Board of Trade, the Omaha Grain Exchange, have no such peculiar powers as the power to execute awards declared by these committees.

LastlVjthe power is given by the charter to inflict fines upon any one of the members who violates its rules, regulations or by-laws. "No such fine shall exceed five dollars'^ says the Charter of the Chicago Board of Trade. Further it states "Such fine may be collected by action of debt, before a justice of the peace in the name of the corporation"^. The Milwaukee Chamber of Commerce may recover any fine imposed by the Chamb by the action of any court.

C. Membership

Membership may be defined as the right or privilege to act as a member of the exchange under the charter and by-laws.

1. Limitation or non-limitation.- In this country either limitation or non-limitation of membership is adopted by the exchanges. The Chicago Board of Trade, the Duluth Board of Trade, the Toledo Produce Exchange and some other exchanges have no definite limit regarding their membership. On the other hand the New York Produce Exchange, the New York Cotton Exchange, the New Orleans Cotton Exchange, the Chamber of Commerce of Minneapolis, the Milwaukee Chamber of Commerce, the New York Coffee Exchange, the St. Louis Merchants' Exchange, etc., have a provision for

1Report of the Chicago Board of Trade, 1915, Appendix p. 6.

limitation of membership in their respective by-laws.

The following figures show the present numbers of members in various produce exchanges^".

Names of Exchanges Present Number

The Chicago Board of Trade 1620 The Duluth Board of Trade 204 The Kansas City Board of Trade 200 The Toledo Produce Exchange 48 The New York Produce Exchange 1780 The New York Cotton Exchange 425 The New York Coffee Exchange 323 The New Orleans Cotton Exchange The St. Louis Merchants' Exchange 1090 The Milwaukee Chamber of Commerce 565 The Omaha Grain Exchange 200

Number of Limitation No limitation

2,200 limitation

450 ■

350 "

500 ■

1090 ■

565 ■

200 »

The question of limitation or non-limitation of membership has been much discussed. Theoretically speaking, however, the limitation of membership may give the exchange more dignity than would otherwise be possible; and also it affords the exchange an opportunity to select the most desirable persons for its members. Consequently, the exchange can enforce its rules and regulations with perhaps greater ease and effectiveness. On the other hand, the limitation of membership naturally tends

^■These figures were obtained from Secretaries of respective Exchanges in October, 1916.

to confine the special and peculiar advantages to the limited number of persons.

Mr. J. G. McHugh states his view on this question as this: "The limitation gives the membership privilege a certain value and by virtue of the fact that the membership privilege is valuable., makes it comparatively easy for the bourd of directors to secure obedience to the rules of the corporation on account of the fear of suspension or expulsion in case of violation of the rules. In those grain exchanges where membership is unlimited or exceedingly large, memberships have comparative1 ly little value, and as a consequence it is much more difficult to secure strict compliance with the rules and regulations on the part of members . "1

The following brief statements are the opinion of some of the secretaries of various produce exchanges from whom information regarding this question has been obtained. The question asked was, "Do you think limitation or non-limitation of membership is more desirable? Why?"

In favor of non-limitation Mr. J. C. F. Merrill of the Chicago Board of Trade says: "To remove all possible suggestions of monopoly"; Mr. C. F. McDonald of the Duluth Board of Trade states: "Free from close corporation or monopoly charge"; the Secretary of the Toledo Produce Exchange says: "No limit best. More traders make better market."

J. G. McHugh: "The Formation, Development and Economic Functions of Grain Exchanges", 1914, p. 2.

In favor of limitation Mr. Thomas Hale, Jr., of the New York Cotton Exchange states: "Limitation is more desirable than non-limitation in an organization of this character. Our trading 'ring' in busy markets is of itself sufficient evidence that limitation is justified"; Mr. Eugene Smith of the St. Louis Merchants' Exchange says: "Number of membership is limited under our rules. It is considered more desirable than an unlimited membership, as otherwise any one desiring membership could come in for a year or two, drop same, and then if his business justified it, come back again the same as in a commercial club or commercial organization, which would thereby restrict the value of a membership, or the value of holding membership in an exchange in which to do business"; Mr. F. P. Manchester of the Omaha Grain Exchange says: "I am of the opinion that a limited membership is more desirable than an unlimited, but, in most cases, this is in conflict with the law"; Mr. Kenry G-. Hester of the New Orleans Cotton Exchange states: "This is a question on which there is much difference of opinion. The founders of this exchange favored limitation of membership, hence made it a part of the organic law of the institution. "