Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1892-06-19
DEALSON EXCHANGES.
Henry Clews Defends Brokers Against
the Charge of Gambling.
THERE is AN ACTUAL DELIVERY
And Margins, Puts, Calls, Etc. Are Not
Understood BY Outsiders
TIE BIG TRANSACTIONS IN DETAIL
,corzrspoSpENcr OF THE p1spArcH.,

NEW YORK, June IT, lnere is lalSe
impression prevalent that vast quantities
of the grain and provisions traded in on the
exchanges are purely imaginary and that
the brokers in reality do nothing but gam
bic on the price cf the staples This kind
Of talk Is ali wrong. There is no such thing
in the business as gambling"
Henry Ciews, the fnancier. paused long
enough in his operation of scanning the
latest stock quotations to give expression
to the above opinion, and then proceeded to
back it up with the following:
'We all know that the primitive and the
modern methods of doing business are as
far removed from each other as the East is
from the West. Commerce in the ancient
days meant that a fisherman who had Sc
cured net of fish travelled inland to dis
pose of the product of his labor to the first
farmer he met who was willing to exchange
his wheat for the others wares.
ga big bridge spans the period between
the trade of that time and the commerce of
the nineteenth century, which is housed in
magnificent palaces, and whose domain
stretches to the uttermost ends of the earth.
To-day the farmers of the West dispatch
their tons and tons of grain to the
commission merchants in New York
and Chicago. These brokers 60 on Change
and sell the wheat to the highest bidder. 1t
may go to some foreign land or be con-
sumed at home-the hand of the exchange
is felt in two hemispheres.
Forms Delicate Balance.
"Let crop failure sweep over some
country and the Boards of Trade furnish
the needed grain. With this institution
there is afforded delicate balance, pre-
serving the supply of food all over the
world in exact accord with the demand.
"As someone has said, and 1 forgive him
for saying it first-ot all the products of
our civilization the exchanges are among
the most servicea5le. They are the places
where those who want to buy meet those
who want to sell. Backed up by all the
accessories of civilization, they form the
governors on the steam engine of progress
automatically regulating the world.
"Is there probable failure of the crops
in Russis the news is flashed at once to
America, and vessels loaded for the Baltic
are clearing for the sea in "a hours.
Now, saws the misinformed individual,
the magnitude of the business done and the
methods of doing it are making of the ex-
changes gigantic engines for robbery and
oppression, instead of, as they should be,
blessings TO the land.
ale goes on trying to show that alleged
abuses have crept into this great system
through a door which was opened for the
purpose of facilitating trade.
Suppose a miller takes a contract to
supply so many thousand barrels of -four
4, TD1N- nd 10 Hrct
Change and contracts with q wheat mer-
chant to deliver to him SO many thousand
bushels of wheat during July and August
at a certain fixed price.
What short-Sighted Critics Say.
''This legitimate and business-Iike method
is alleged to be abused in this way: An
other man, not a miller, or not really de-
string to grind the wheat into flour, be-
ieves that when July or August comes the
mark ct value of wheat will be higher than
the wheat can be now bought for delivery
then, and he buys on speculation for future
delivery.
''This regard as a Straightforward busi-
ness transaction-especially so, when it is
considered that the actual wheat is de-
liyered, but this part of the deal, apparent
", is overlooked by the doubtful Thomas
who questions the mode of trade adopted on
the exchanges, and takes a case like this as
an illustration of what a farce he thinks the
whole business is:-
"He assumesithat the broker who pur-
chases the wheat does not want it because
he has no actual use for it and doesn't care
to be bothered with a commodity that is of
no value to him. From this, he reasons,
the next step is easy. A, in May, sells B
5000 bushels of wheat, to be delivered in
June, at 81 10 bushel. June ends, and on
10, ko rl-ot -
81 Is
According to the uninitiated idea, A
does not deliver to B the wheat; ne simply |
hands him S40O, the difference on 5000 |
bushels between the price at which he |
bought and the market
''The grain has become a commercial fic- |
tion, thinks the misguided person, and the |
two men are simply betting on the price of |
the staple on the 30th of June. A bets that |
it will be 81 10, or less, b bets that it will |
be more, and the rule of the game must be |
that the loser shall pay the difference be- |
tween his guess and the actual price.
The Actual Goods Ars Delivered.
'Instead of legitimate trading, the hasty |
individual jumps at once to the conclusion |
that the exchange brokers gamble as truly |
as If they bet on the turn of card or the |
speed OF horse. This is all mistake |
The actual goods are delivered and the |
whole amount of money paid over. There |
is no fiction about it.
"When we hear people calling stock |
speculation gambling, it recalls the story of |
those Chicago clergymen who called upon |
President Lincoln in the early days of the |
war, when the Government was not quite |
ready to back up emancipation. and urged |
him to issue al once proclamation abolish |
ing slavery. The President listened to |
them atteEtively and then asked the ap-
parently irrelevant question, Call sleeps |
tail a leg, and how many legs will the sheep
kave?' Five answered several of the |
clergvmen in unthinking chorus No. re-
piled Lincoln; mot five, but four; for call
ing a tail a leg won't make it a leg
''And so it is with stock speculation;
calling it gambling doesn't make it gam
bling
Dealing in Futures.
Dealing in futures is supposed by many
to be abused in numberless ways. Take,
Tor instance, the option feature, which gives
the buyer or the seller the option of set
tling at any time between the transaction
ana given date. Of course you know that
q trade made seller June means that the
seller can tender the merchandise at any
time during June, and the buyer must pay
for 1t when rendered. A trade buyer
j une' just reverses this and permits the
purchaser to demand the goods at any time
in june that he sees fit.
Nov this option privilege has peculiar
feature in the form of the put A thinks
that wheat is going down. 1t is to-day
Il II; by paying IS or SO to B, gives
him the night to put or deliver him 500
bushels at 81 1015 within three days. IF
the grain does not go down below 81 10H