An Historical Footnote Yesterday a friend asked me to respond to a query which had been addressed to the Louisiana Historical Society on its FB page. Just got the following query. Does anybody have any insight? I have found a token from the new Orleans cotton exchange an would like to found out more about it on the back it says token of the seventy fifth anniversary of the founding of new Orleans cotton exchange 1871-1946. Its an interesting subject, one which has not been explored in depth. My answer: A commemorative coin of sorts, more analogous to a doubloon circulated by a Mardi Gras krewe during carnival. Ive never seen one which had been distributed by a business or public institution. The Cotton Exchange was a post civil war innovation. It had been chartered as a joint stock company and its members owned the shares. It allowed brokers and speculators to make a market for each years production; i.e. bringing together sellers and buyers. A hedging mechanism for forward selling. It enabled sellers to expand their access to credit by selling contracts for the future delivery of a fixed amount of cotton at a fixed price on a fixed date. Those contracts, in turn, could be pledged by the buyers to sundry lenders. The sellers received ready cash. The New Orleans cotton exchange was a secondary exchange. The primary market maker in the US was the NY cotton exchange. After the Civil War, the bulk of the production in the Lower Mississippi Valley largely by-passed New Orleans. The Cotton Exchange, I think, was intended to offset the huge contraction of credit facilities which had been occasioned by the Civil War and the emancipation. It wasnt a significant innovation on the pre-war organizations which had mediated credit relationships for factors, bill brokers and especially planters. At best a stop-gap measure which enjoyed limited success in post bellum decades. Most of the shares had been subscribed to by New Orleans cotton factors. They were in desperate straits. Succession inventories of factors estates in the 1870s and 1880s often listed a single share of stock in the exchange as the successions sole asset. Sometimes, too, a share in the Metairie Cemetery Association. I think the two buildings which successively housed the Cotton Exchange are still extant in the CBD. By 1946 the Exchanges prominence even in New Orleans was waning.
Posted on: Thu, 07 Aug 2014 15:20:08 +0000
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