The great exchanges, and the New York Exchange in particular, are thus used by cotton merchants and manufacturers in every part of the world to protect themselves in their buying and selling operations. The value of middling cotton in New York is kept upon par with the value of the same cotton in any growing or manufacturing point, such factors as freight, insurance, brokerage, etc., being allowed for in the quoted price. Quotations on the Liverpool Exchange are thus higher than quotations in New York by the difference between the amount it costs to deliver cotton in Liverpool and to deliver it in New York. Thus the merchant and manufacturer is able to buy and sell hedge contracts on the New York Exchange, knowing that operations at the New York price in New York are on a parity with operations at the Liverpool price in Liverpool, or at the Havre price in Havre. Thus the hedge contract which a Southern merchant sells in Atlanta, through his broker on the New York Exchange, may be bought by a spinner in Tokyo or Manchester, anxious to insure his supply of cotton at a price which would make his contracts profitable. In normal times the selling of merchants and the buying of manufacturing engaged in actual and bona fide hedging transaction has been estimated by competent authorities to make up fully seventy-five per cent. of the trading done on the New York Exchange. The remaining twenty-five per cent. may thus be attributed to speculative operations, that is operations entered into by outsiders through brokers, on the chance of a rise or a fall in the market. Nor is such speculation without its value. It is the speculators, as a rule, who are the first to take advantage of crop reports or weather conditions, or news likely to affect the market favorably or unfavorably, and buy or sell as their judgment dictates. Their operations serve to discount such changes to some extent, or at least to make the breaks and rises more gradual than they would otherwise be.