THE object of this inquiry is to make a realistic study, mainly with regard to the textile industries, of the economic units which may be termed "businesses" or " firms." Our prime purpose is, in the first place, to discover whether a typical size belongs to each class of industrial unit, and, if so, whether there is a regular distribution of business magnitudes about the type, and, in the second place, to explain any uniformity disclosed. Incidentally, moreover, we shall aim in some cases at describing and accounting for the diverse natuires of businesses or firms. In a word, our work is a tentative realistic research in industrial morphology. Our material has been obtained from the following directories Messrs. Worrall's2: Cotton Spinners' and Manufacturers' Directory for Lancashire (1911). Cotton Spinners' and Manufacturers' Directory for Lancashire (1884). Continental Directory of Cotton Spinners and Manufacturers (1912-13). Yorkshire Textile Directory (1912-13). Textile Directory of Ireland, Scotland and Wales (1912). 1 MR. LEONARD F. B3EHRENs was associated with us at the beginning of our work for several months. The labour involved in the preparation of the section on weaving in Lancashire largely fell upon him. We desire to express here our obligations for his valuable collaboration. 2 We desire to express our obligations to Messrs. Worrall for material in their offices placed at our disposal and their readily accorded assistance on points of interpretation. VOL. LXXVII. PART V.

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All use subject to http://about.jstor.org/terms 1906.] Futures on tle Cotton Market. 323 Mississippi Valley, the next best in Texas, and the poorest on the Uplands (i.e., Georgia and Alabama). Considerations of growth determine to a great extent the hardness or softness, and strength or weakness, of the fibre, and thus, indirectly, whether the cotton is suitable for warp or weft. When the spinner has informed the dealer exactly what quality of cotton he wants, the dealer quotes in "points on or off." According as the spinner wants immediate delivery or delivery in some future month, he pays the price of current "futures," or of " futures " of the month in which he wants delivery, plus or minus the " points on or off " previously fixed. The future quotations used in England are those prevailing in Liverpool at the time of the purchase. They refer to Upland cotton of middling grade, of "no staple" and of the worst growth. Except on days when there is actually no business being done, the prices are continually moving a few points first one way and then the other. The frequency of oscillation varies with the excitement of the market: the fluctuations of " near month futures " on a certain day when the net drop was 33 points and the range 59 points (namely, 8-45 to 7-86), i.e., when the change taking place was considerable, numbered nearly I50. The "spot" quotations published daily which refer to the same grade of cotton are fixed by a committee according to the condition of the market, and its work is much more difficult than might appear at first sight. The cotton represented by the quotation is very little dealt in on the Liverpool market, as the poorest qualities are not much spun in Lancashire. As a result of this, the exact number of "points " on or off " frequently cannot be ascertained, and consequently the quotations are to some extent nominal. The " spot" quotations are, therefore, only a general index of the movement of prices of cotton, and must not be taken to show at all accurately the prices of any particular kind of cotton. For example, after the size of the 1904-05 crops became known, and the Americans attempted to hold back cotton, the "points on " for many qualities rose considerably owing to artificial scarcity, though the price of cotton, as indicated by " spot," remained low. We may remark in passing that there is a tendency for cautious spinners in England to take no risk and to fix the price of their yarn in accordance with quotations made by the dealers for actual cotton of a specified quality. A word must be said with regard to the comparative mobility *of "future" and "spot" prices. Generally speaking, the prices of futures are moving up and down all day long, and theoretically, owing to the manner in which spot is quoted-i.e., by "points Y 2

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