Gamblers in Silk

Strangely aloof from the excitement of Manhattan's Wall Street is neighboring Hanover Square. While Wall Street appears to be what it actually is--the financial centre of the world's greatest city --Hanover Square seems more like a respectable and long-established village.

So remote is Hanover Square from the feverish doings of Wall Street that the casual visitor might leave with the impression that little business finds its way there. For such a visitor would not be likely to see the ringlike tables which themselves form a ring about Hanover Square.

These are the gaming tables of lower Manhattan. The gamblers are U. S. traders. The stakes are the world's rich supplies of cotton and rubber, of cocoa and spices and coffee. Near Hanover Square are clustered Manhattan's famed commodity exchanges.

Speculators rejoiced, last week, as one more "ring" was made ready for the traders. When the secretary of the National Raw Silk Exchange mounts the rostrum (sharply at 10:30 a. m., Sept. 11) and utters the word "October," a new commodity exchange will be in operation. Promptly, one of the traders will quote a price, approximately $5. He will have offered to buy or sell five bales (665 Ibs.) of October silk at $5 a pound.

This establishes an opening price. But no actual trading will be done until the secretary has finished reading off the list of months, from October to April. When the "call" has been read, when a quotation has been fixed for delivery of silk in each of the next eight months, the men seated at the "ring" will begin to buy and sell. At the close of the day, the last quotations will be chalked up on a blackboard. On the following day, traders may not advance or lower these quotations (per pound) by more than 50-c-. Thus the exchange authorities hope to avert sudden panics. If every bank in Japan failed overnight, the price of silk could not vary by more than 50-c-* on the next day.

Importers and manufacturers alike are among the 265 members of the new exchange. They paid between $2,500 and $6,000 each for the privilege of sitting at the "ring" and trading in silk futures Chief among them, youngest of Manhattan exchange presidents, is 37-year-old Paolino Gerli, scion of a long line of silk importers. His early training took him to Japan, where indifferent silkworms spin out 75% of the world's supply. Now he is vice president of E. Gerli & Co., largest of U. S importers, doing an annual business of $100,000,000.

No commodity exchange is started without opposition. Importers fear professional gamblers, with no interest in the industry, seeking only new fields for speculation. Such fears have postponed, perhaps indefinitely, plans for a jute and burlap exchange. But an exchange to deal in metals futures is scheduled to open about Nov. 1. And last week, at Albany, papers of incorporation were filed for the National Cotton Exchange, to compete with the 57-year-old New York Cotton Exchange.

But many an economist, condemning professional speculators, still supports the commodity exchanges. Most recent of important benedictions was the declaration of able Frank J. Cavanaugh of the National Bank of Commerce. Said he:

"The annual turnover on futures contracts in commodity markets already reaches some thirty or forty billions of dollars. They . . . touch directly the lives of comparatively few people. Yet there have been indications of a more widespread realization of the important place these organizations occupy in the marketing structure. . . . The futures exchanges bring into the market a large number of equity traders who . . . lift the burden of risk from the shoulders of producer, merchant. . . ."