New Ulm review. (New Ulm, Brown County, Minn.) 1892-1961, 1892-04-20
LIND TALKS ON OPTIONS
The Congressman Brings Out Many Valu-
able Points.

| ClUlC = OllUSs
Congressman Lind was interviewed in
Washington the other day relative to an
editorial in the Pioneer Press on the wheat
question, and, after commencing the
Press for its fairness and stating that such
treatment of subjects tended to obviate
class movements in politics, he CON
tinued:
| find that the difference between the
market or board of trade price and the
consumption price of wheat (in the form
of f1our) is usually quite as marked
here, as the difference between the Ameri-
can market price and the consumption
price in England. Like the editor, l
found this difference could not be ac-
counted for on any theory of freights,
handling, or profits of time (interest), and
concluded to look for it elsewhere 1 ex-
amined every incident connected with
the transfer of the wheat from my farm
in Sibley county to the place of consump-
ton, and | will briefly go over the ground
The load of wheat, as soon as hauled
from my farm and sold to the elevator
company at Winthrop at 10 cents off the
Minneapolis market, is at once sold again
by the elevator company in Chicago or
New York for delivery at some future
time - say in May - and l will call this
a sale of MAY Wheat
The object of this latter sale, as is
stated in a series of resolutions forward
ed to me last January by the Minneapo-
lis Business Mems Union, is ''to insure
against loss by decline in the market"
while my load of actual wheat is carried
East for export or consumption, depos-
it of 5 cents per bushel or less, known as
''margin,' and a commission of ] of
cent per bushel being all that is required
to effect this 'sinsurance." If wheat goes
down while my load of wheat is in the
elevator or in the transit, the decline is
made up In the approximately cores
ponding fall in May wheat, or vice versa.
When my load of wheat again changes
hands the same operation of insurance or
'shedging' is repeated. But this is not
all. In addition to these sales by way of
insurance or hedging on the part of those
who handle the actual grain, untold guam
titles are sold every day for purely spec
ulative or gambling purposes. There was
sold in New York last January 3,515, 700
bushels for future delivery or options.
The Chicago board of trade keep no rec
ords, but it is asserted that the dealings
in options has attained much larger pro-
portions there than in New York. 1t is
estimated that over fifty bushels of '.ic-
titious'' wheat is sold to every bushel of
actual. Nor is this all. Of late the
European grain dealers have adopted the
American plan of 'sinsurance" by the
sale of futures in Chicago or New York,
SO that every cargo of wheat bought in
India or Russia is secured against decline
by the sale of futures in one or the other
of the cities. These practices, as thus
briefly outlined, are well known and ac-
knowledged facts. | will only add one
other thought, suggested by the editor.
He says: at is admitted everywhere that
the foreign demand fixes the worlds
price of wheat, and this process takes
place in Liverpool The correctness of
this [ doubt. I hardly believe it accur-
ate in this age of rapid transit and in
stantaneous communication to sag that
any country fixes the price of a COM
modify of universal trade and consump-
ton like wheat. The factors of supply
and demand are reflected back and forth
with such rapidity that the price for CON
sumption is very apt to be the joint act
| of producers and consumers, both here
and abroad, if left to be fixed by the
natural process. But as is shown con
clusively in the editorial and suggested
/ by me awhile ago, we find that the mar.
ket price of wheat in this country is con
lsiderably lower than the consumption
price in England. This market price is th'
| basis on which the farmers wheat is bought
Being lower than the consumption
price," it has a constant tendency to low
er the latter. Prices strive to equality
The lowering of the consumption price i
further reflected in still lower marke
prices. The gist of the whole inquiry is
therefore: Why is the market price low
Ter? The answer, or any attempted an
swer, must necessarily be theoretical
ISuch is the one I offer; but it is base6
on certain psychological incidents or for
Ices that I find inherent in the practice o
future or option dealing, peculiar to i
and absolutely wanting in every othe1
form of trade or eqchange.
All will admit that price as rule i
subjective. Its height, governed by men
Ital operations, is controlled, Of course
more or less by the known demand fol
the commodity and its visible supply
/ make no attempt at technical accurac.
in stating this. simply desire to cal
i attention to well known facts and ex
perience. For instance, if we should re
slceiye adyices tomorrow that floods IL
India had destroyed the grain crop ther'