They applied the “Page 99 Test” to their new book, The Cotton Kings: Capitalism and Corruption in Turn-of-the-Century New York and New Orleans, and reported the following:
Page 99 of The Cotton Kings describes a crucial moment in the book and illustrates two of our main points. First, it demonstrates how cotton brokers in the early twentieth century, the smart ones anyway, used the agricultural calendar as the basis of their trading strategy. Second, it shows how two of these cotton brokers came to New Orleans before the turn of the twentieth century and built a network of bull traders that wrested control of the market away from bear traders based in the corrupted New York Stock Exchange. William P. Brown and Frank B. Hayne did make fortunes, especially in 1903 when they cornered the world’s cotton supply, earning millions of dollars and pushing the price of cotton up to enrich the farmers as well as themselves. Still, corrupt practices on the New York Cotton Exchange continued to keep prices artificially low, enriching bear traders but spelling disaster for hard-pressed farmers and manufacturers dealing with volatile prices for their raw materials. The moment this page describes, in 1909, sees Brown and Hayne building an ever bigger network of bull traders, backed by cotton manufacturers in the South. This new network cornered the market again and threatened to effect a permanent squeeze. But then, as one observer noted, “all the bears [got] so scared that they [had] to call for the policeman,” and the case eventually wound up in the Supreme Court.Learn more about The Cotton Kings at the Oxford University Press website.
The “summer shortfall” was the key to Brown’s trading strategy. He bought up cotton futures contracts that would mature in the summer months before the new crop began to come to market in August. If he could buy enough futures contracts, and if he had enough money to pay for the cotton, he could demand the sellers deliver the actual cotton they had promised. As supplies of cotton ran short, the sellers would have to buy cotton for whatever price it was available, even if they lost money on each bale. If they could not meet their contracts, they risked being kicked out of the exchange. Brown would become the only person with cotton available, and sellers would have to buy it from him (at a high price) just in order to sell it back to him (at the low price promised in the contract).
Page 99 therefore captures a great deal of the drama of cotton futures trading and its main characters, and captures the argument of the book as a whole.