The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1883-01-08

The Place They Hold In Trade and How
They Work.

New Hoft sun.
The future in fine, Is contract on paper
for the future delivery and receipt, within
specified time, OF specified quantity oil
merchandise, at specified price. The &C
tual merchandise may not be delivered on
that contract, however, for futures are used
as means OF insuring actual transactions
as well as carrying them out. For instance,
the man who receives an order 10 buy or
sell may not be able, for various reasons,
to make the transaction at the moment,
though the price may be at or below his
limit. The exact goods be wants, in the exact
quantity, may not be available at the
moment. He therefore buys or sells a
future contract for like amount. As soCal
as he has afterward carried out his order in
the "spot" market-that is, by buying or
selling the actual merchandise, he closes
out his future contract, and the transaction
is completed. He has, in fine, used the
future simply as an insurance against pos.
sible or probable fluctuations in the mar
ket while he was executing his order.
There are other uses OF futures as a
method Of insurance against loss. For in
stance, commission merchant has ad-
vanced on quantity oil wheat 30 per cent
OF Its New York value Hesees the market
declining and his margin disappearing.
He must then, 10 save himself, sell out the
wheat at current prices, get more margin
from the consignor, or sell future for the
same amount at the ruling price. He may
be unable TO at once close out the wheat,
and the extra margin may not be forth
coming. II he sells future, however, his
advances are rendered secure. He is in.
sured. BY that means, too, the interests of
the consignor are protected. He may also
thus gain time to make up the extra mar
gin, and so be able to get the advantage OF
a possible rise by carrying his wheat as he
originally intended.
The farmer or the planter may make the
profit on his crop certain before it is har-
vested by selling a future contract which
bis crop will meet. be can thus secure
himself. For instance, cotton planters this
year have sold futures on their crops at
perhaps III cents a pound, giving them
nearlya cent and half above the present
prices. The same thing is still more true
Of our cereal crops, though small farmers
must sell their product for what it will
bring at the nearest market
The miller and manufacturer can with
perfect safety make engagements for their
product weeks and months ahead, for they
know exactly the price OF their raw ma
trial. They can assure themselves by
buying futures
. The sales of futures based on actual
transactions even may, however, largely
exceed the volume OF . crop, for the same
commodity is sold over and over again.
They may be said to represent, not the
value Of the ciop, but the number Of hands
through which the crop has passed, that is
to say, the various transactions in it. Legit-
imately used as means OF insurance,
futures are, therefore, Of unquestionable
benefit all around. They are simply means
OF eliminating every possible speculative
risk in carrying out orders for the buying
and selling OF our crops. Our fathers were
often ruined through doing spot business
on comparatively moderatescale, because
they were utterly unable to realize on their
merchandise until decline in price had
used up their capital and credit.