Bremen Cotton Exchange Part 5

The river, on which Bremen is situated, was so heavily silted up, that sometimes in Summer, one could wade through it; no sea-going vessel could reach the town. Under these circ.u.mstances, the opportunity of establis.h.i.+ng a cotton market in Bremen might easily have been missed.

The trade which was indigenous to Bremen pa.s.sed, in the second half of the 19th century, through a period of transition. The s.h.i.+pping business from olden times, a main stay of Bremen's commerce, had to adapt itself to more modern requirements. The small vessels. .h.i.therto used, had to make way for bigger ones, the steams.h.i.+p had entered into the world's traffic. There was hardly a proper connecting link with the interior, no water ways existed, and the efficiency of the railways was extremely poor. Surely, these were not conditions that cried for the opening of a market centre. Yet it was established, it grew and blossomed into success.

Was this chance or method?

We owe many thanks to the State of Bremen for its co-operation, for, with astounding energy, this small state undertook to build a sea-port in Bremen town. This necessitated the deepening of the river "Weser", to which work the neighbouring states lent no help, but rather, placed difficulties in the way.

This grand work deserves an essay of its own, on account of its influence on the commercial, political and economic position of Bremen.

Here only, be it mentioned, that the furtherance of the cotton trade was a constant stimulus to this great plan. The authorities and the representatives of the trade were in the best harmony, and the most perfect arrangements were made for the dealing with cotton. Great practical knowledge and experience was shown, in settling the question of how to raise the interests and amortization needed for the vast expenditure, and of how much the trade could bear without crippling it.

The state furnished the capital for the building of great warehouses, and within a number of years their cost was paid off, as planned. In this way, Bremen became equipped with all modern requirements for the handling and storing of cotton, which, even to-day, are unsurpa.s.sed.

The port has the highest reputation for the quick and painstaking unloading and dispatching of cotton cargoes.

The co-operation of the banks has already been mentioned, but we do not deem it superfluous to repeat, that without capital, no enterprise can be effectively launched, and all roads to successful completion are barred. Fifty years ago Bremen was poor in capital. What existed of riches, and was not needed in business, was, by preference, locked up in American securities, very little was left liquid for the Cotton Trade, although big amounts were needed to handle the import of cotton.

Credit is not given by merely asking for it, only he is ent.i.tled to it, who is sure that he can fulfil his obligation. To incur debts, trusting to luck to pay back, is bad policy. It is unfair dealing to accept goods on credit in the hope that their sale will leave a profit, this is only permissible, when sufficient capital is in existence to pay for the goods, even though a loss takes the place of the expected profit.

As these views dominated the trade, close connections could be started with the banks. State and banks have greatly helped the growth of the Bremen cotton trade, besides them, however, the a.s.sistance of many others must be gratefully acknowledged. Most particular reference has to be made to the forwarding trade. With admirable energy, the forwarding houses made all arrangements for the careful and expeditious handling of the technical part of the cotton trade. Right from the beginning, they worked on the principle of trustworthiness and reliability, well knowing, that only by these, a mutual confidence between all parties could be established. The great trust shown, alike by s.h.i.+ppers and receivers, to the Bremen Forwarding firms, has made the dealing so easy and satisfactory. The post and telegraphic authorities have likewise been imbued with good will towards the needs of commerce, thereby a.s.sisting considerably the furtherance of trade. The harmonious cooperation of so many powerful allies, enhanced the value of the work done by the cotton market itself, though, never for a moment, must the diligent work slacken, lest the budding tree should stop growing.

Anybody engaged in the cotton business has to be at his post every minute, always ready to take a given opportunity. Exact information concerning the conditions in America, as well as personal connections in that country, are of great value. It is characteristic of the German merchant to follow up a business once he has commenced it, and this close attention, from early youth to ripe old age, has contributed materially to the success of the Bremen cotton trade.

FLUCTUATIONS IN PRICES.

In the Spring of 1921, the following conversation might have been overheard between an American and a German.

A.: You see the consequences of the war are worse for the victor than for the vanquished.

G.: Only apparently, and for the moment. The future, I fear, will teach us something different.

A.: n.o.body can look into the future. At the present minute, we witness the biggest economic collapse that the world has ever seen, all countries suffer from it, except Germany. All states had made preparations for peace, now the stored up goods are lying there and n.o.body wants them, not even Germany. We thought, that Germany, bare of everything, would swallow anything.

G.: The reason is, that Germany cannot pay. Her gold and tangible gold values have been taken from her. Why do not the other countries buy? Their peace production has been lying idle for years, consequently, the shelves must be fairly empty.

A.: Quite right, but prices have risen to an unreasonable height.

During the war, a most wasteful regime prevailed; everybody made big profits or received huge wages, and accustomed himself to a most sumptuous life. Now, vengeance is upon them, for nature does not allow herself to be ravished, nor does she present gifts for extravagant living.

G.: If prices have been driven to an unreasonable level by wasteful workings, then, a big decline in prices is the only remedy.

A.: We are in the midst of a phenomenal collapse of prices. Cotton is a barometer for all other goods. The price in America is, to-day, 11 cents, a short while ago, it was 40 cents.

G.: What does the planter say to this?

A.: The cost of production is for him this season about 25-30 cents per pound. He has worked for nothing, and besides, loses a good deal of money, as his means are small, he will be heavily in debt.

G.: And the further consequences?

A.: The planter is absolutely unable to produce a similar crop. It is the old story, when prices are too low the crop will be curtailed.

G.: We have always experienced that low prices are followed by high ones. What other consequences is this collapse in prices likely to have?

A.: All cotton goods fall in the same proportion as the raw material, this means a bad crisis for commerce and industry, and an unprecedented amount of unemployment. Besides, this collossal drop in prices has caused other very peculiar situations.

G.: Of what nature?

A.: It is well known that cotton is rarely bought at a fixed price, but generally, at the "future" price of the day on which the buyer "calls" his cotton, plus or minus the agreed upon difference for the quality bought. Now, several American houses sold low qualities, at 12.50 cents "off". At that time, "futures" were 40 cents, so that the seller calculated to receive about 27.50 cents, to-day, "futures" are 11 cents, so that, if the buyer "calls" his cotton to-day, he receives it for nothing, and can claim 1.50 cents per pound as well.

G.: Impossible! No German law would permit a buyer to demand his goods, without paying a price at all, and be justified in claiming money in addition from the seller.

A.: What decision would the Bremen Cotton Exchange give? Two possibilities are to be taken into account. If the seller has taken a "future" contract as cover, he has no loss, even if he gives the cotton for nothing, and pays 1.50 cents in addition, because the difference in the "futures" indemnifies him. But if he has no "futures", what then? to part with valuable cotton for nothing, and pay good money as well, would exceed the demands of Shylock.

G.: The "Bremen Cotton Exchange" would probably decline to adjudicate, it has the right to refer it to the ordinary law courts.

A.: A hard nut to crack for the law!

German and American agree on the following:

It is a peculiar thing that cotton has always new riddles in store for us. The fluctuations in prices are enough to drive a man mad.

Woe to him, who is drawn into that maelstrom. The hedges are a safe guard against price fluctuations. The careful merchant thinks he is on solid ground, when, all of a sudden, the premium for the quality begins to rock and he wonders what is worse? the fluctuation of the "future" market, or those of the premiums.

Hundreds of thousands of bales have been sold, at a premium of 10 to 15 cents for goodmiddling, to-day, the premium is 3 cents, that spells hard times for the cotton market. It is a consolation, that bad times are quickly followed by good ones, and that the darkest hour is before dawn. Cotton typifies life and death, joy and sorrow. It is like an untamed animal, it deals serious wounds, it indulges in "buck jumps", that none can foretell, n.o.body has ever driven it in harness. And yet, he, who deals with it quietly, carefully and pluckily, will always remain fresh and full of life.

Cotton is king!

THE EXCHANGE BUILDING.

In the year 1902, the Bremen Cotton Exchange opened the doors to its various tenants, and, as the outward appearance of a man has an influence on the impression he makes upon us, so does the building which houses the cotton trade, play its part. Previous to that date, the business of the Exchange was carried on in rented rooms, but with expanding trade, these became inadequate, and a new building was contemplated; the idea was, to make the outward appearance worthy of the importance of Bremen's cotton trade, with due consideration to the local conditions. Bremen can boast of a thousand years history, and has many fine examples of ancient architecture, notably around the market place. There you find in the rich ornate style of the renaissance, the "Rathaus" (town hall) and in another style, that however blends harmoniously, is the "Schutting" (the seat of the chamber of commerce), the "Dom" (cathedral), the "General Exchange", as well as a number of private houses of a later date. The combined appearance of these various buildings, form an imposing picture. The site for the new exchange is situated in this very neighbourhood, consequently, a building had to be designed that fitted in with the whole scheme.

Prominent architects competed, and the plans that gained the first price were accepted, and commissioned for execution. Unfortunately, it was proved later on, that the choice had not been a lucky one. The architect adopted the style of the ancient "Rathaus", but the rich ornamentations of this architecture, proved its doom. Beautiful as the effect was on the smaller, gracefully built, Rathaus, yet on the ponderous building of the "Exchange", it was utterly unsuitable, and another thing the architect did not consider sufficiently: The old guild masters, with their circ.u.mspection and devotion, erected buildings to last an eternity, while now-a-days, all is hurry and scurry, the sooner the job is finished the better, as fresh orders are waiting. This may, possibly, be some excuse for the little care bestowed upon the selection of the material. The soft sandstone selected, was excellently suited to the quick sculpturing of the over-rich ornaments, nevertheless, it was a ghastly mistake to have chosen it. Ten years after the building was finished one of the decorations, loosened by the weather, fell, and killed a member of the Exchange. An examination showed that a great number of projecting stones were so weatherworn, that they crumbled in the hand. An ugly scaffolding had to be erected to protect the street traffic. Measures were at once taken to construct the front of the building more solidly; the most prominent experts were asked for their advice, but the war broke out, and nothing could be done. During the first years after the war, want of money prevented the starting of the repairs. These had become more extensive, owing to the revolution, when the building had been under artillery and rifle fire. At last, however, came the propitious moment, when one could think seriously of beginning the work. It was thought of raising half the estimated cost of 15 millions, by voluntary contributions from the trade and the industry, and both responded n.o.bly to the call. But the moment the money was secured, most of it melted quickly away, through the depreciation of the Mark.

Nevertheless, this day of the 50th anniversary sees the work in full swing, and it will not be long, before the too richly carved front of the building will have given place, to one of greater simplicity and n.o.bility, which better express the wishes of the Cotton Exchange. The interior of the Exchange is entirely adapted to the needs of the business, special attention is being paid to the light. The judging and valuing of cotton, require a pure and clear day light, this is of such importance, that it cannot receive too much consideration. A portion of the building is reserved for the Cotton Exchange, while the remainder is utilised as offices for the various cotton firms, unfortunately, there is not room enough for all of them. It would be of great advantage, if all the firms could be housed under one roof, and plans for this are contemplated, but when they will be executed, depends entirely upon the economic development of the future.

WORLD-WIDE BUSINESS.

A New-York commission agent, who has connections all over the world, receives a telephonic message from Texas to sell 100 bales of "futures". At the same moment, he receives a cable to buy a 100 bales of "futures", both orders equalize each other, the execution is easy, a few words on the telephone, a cable, a letter, and the business is done. Such transactions are daily occurrences, they leave no particular impression, nor call for any deep thought. And yet, it is very interesting to probe deeply to find the origin of this business. A planter in Texas has worked hard for six months with his entire family, to raise his cotton crop. In the early days of Spring, the ground had to be cleared and ploughed to prepare it for the seed. Then comes the time of sowing, and soon afterwards, the weeds require attention.

Hardly have these been uprooted, when the injurious insects make their appearance, they are destroyed by artificial means. Over and over again, the fields require most careful attention, till, at last, the cotton begins to ripen. In the broiling sun it is picked, and only then, the planter is sure about the out-turn of his crop. The prices are favorable at the moment, and he makes his calculations. For extra help, he had spent so much, and for the frugal life of his family and himself, a further amount was required, but the account was all right.

If he could obtain the present price for cotton, he could pay for everything, and have a margin to the good. He decided to secure the price by giving the afore-mentioned order.

In the family of a landed proprietor in Hungary, was joyful excitement, the daughter of the house had become engaged to be married. The wedding was to take place soon, and the question of the trousseau was discussed. This, resulted in a visit to a merchant in a neighbouring town, who discovered that his stocks had run too low for the reputation of his business; at once, he gave a commission to the wholesale merchant, who, in turn, sent a considerable order to the manufacturer.

Thus it goes on, till finally, the mill that spins the yarn, buys the cotton in Bremen, where the merchant cables New-York, to cover the "futures". The business, so unconcernedly done in New-York, had deep lying reasons, which never came within the vision of the commission agent. In a similar manner, the world's transactions are governed. We do not look beyond our own particular horizon, we take what the minutes bring us, without troubling our sluggish mind for the "whys" and "wherefores". Nothing, however, is done in the world's eternal circle, without cause and effect. Should our mental capacity be able to grasp every transaction in its entirety, we should see, that a never ending thread connects all of us who live and work.

When the thread is broken, disorder and confusion replace the organisation, that is as finely balanced as the delicate works of a clock, and endless trouble is required to piece the thread together again.