Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1883-09-26
UNDUE SPECULATION.

Since the civil war there has grown up
in this country enormous speculative
dealings In cotton, grain, provisions,
petroleum, and other articles of CONNER
cial consumption. For every one bushel
of wheat actually grown there are prob
ably two hundred bushels dealt in. This
trading takes the form of bets on the
future price of the article, the better
settling Ithe difference of the quoted
market value when thecontract expires.
Now, dealing in options is not in itself
immoral; indeed, it is Indispensable in
the transactions of modern commerce.
The cotton planter in the south rarely
has money of his own. He is forced to
borrow in order to buy seed or hire Ia
Dor to work his cotton plant. This he
does by selling a contract to deliver
certain quantity of cotton eight or ten
months ahead. Then the Lowell manu-
facturer or the Manchester spinner, to
insure himself full supply of cotton at
a low price, purchases the option of re-
ceiving the cotton often year ahead
from date All this is speculation, but
it is perfectly legitimate, and serves a
useful purpose. But here step In the
great speculative gamblers, and they
sell, or agree to receive, what has aptly
been termed "phantom cotton, that is
an option to buy or sell that article at a
definite figure. In the New York market
the actual amount of cotton handled
does not much exceed 100000 bales per
annum, but on exchange the sales an
nually amount to over 35, 900, 900 bales.
Only once in our history have over
100000 bales been grown in this
country. This speculation does not
really enhance the price of the cotton
permanently, although it occasionally
brings about CORNERS In certain
months. Take the year through, it
is supply and demand. production
and consumption, not speculation,
which determines the market value of
cotton. This illustration, drawn from
that fiber, is also true of grain and pro-
visions, as well as petroleum. In the
month of May last, in New York, $780,
000,0 barrels of petroleum were dealt
in speculatively. Yet the total produc-
ton of coal oil since first discovered
would not reach that enormous figure.
Chicago, however is the great headquar-
tiers for the speculation in food products.
Millions of bushels of corn, wheat and
oats are traded In, where not more than
a hundred bushels are actually handled.
" Corners are the natural result of this
wild dealing, which frequently results in
the ruin of the cornerers. A person
named McGeoch undertook to " corner ,
all the lard of the country, that is to
say, to artifcially enhance its value. He
was ruined in the attempt, as he de-
served to be. His operations were so
gigantic that his fall produced partial
panic in the wheat and provision mar
kets, and even affected the stock ex-
change. While these speculative deal
ings do not on the whole advance the
price of food, they give birth to many
evils. They lock up money which could
be more productivity employed in gen
eral business, while they tempt our
whole mercantile community to become
gamblers. The great exchanges of the
country have become converted into
huge faro banks, where business men
bet their money, not, indeed, on cards,
but on the price of the products in
which they are interested. Congress
ought to tax speculative sales, and pub
lie opinion should everywhere frown
upon these intrinsically illegitimate and
immoral transactions.