The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1892-02-07
EVILS OF "SHORT" SELLING
More Testimony on the Subject of Deal
ing in Grain Options and Futures.
Mr.. Sawyer Speaks for the Elevator Men and
Mr.. Aldrich for the Chicago Board o fTrade
The wind Seller" Denounced.

WASHINGTON. Feb. GA j. Sawyer. Of
Minneapolis. who was before the House
committee on agriculture two days ago in
opposition to the a%nti-option bill. to-day
continued his statement concerning the
system of business prscticed by the large
wheat-buyers of the Northeast, and de-
Tending the custom OF buying options on
the exchanges to cover the possibility of
loss on the wheat in elevators. He said
the speculator carried the surplus for the
actual wheat-buyers under the option sys-
TEN. and enabled them to soil their wheat
from time to time as fast as 1t could be ab-
sorbed. If the wheat in store wss showed
forward the market would be glutted and
cash wheat would fall to Q very low price.
In buying futures against the wheat he had
In elevators. the elevator-owner Insured
himself against loss
Mr.. Moses said that cotton-brokers somc-
times lost money through spot cotton going
down while futures were going up. and
asked Mr.. Sawyer if he was not liable to
loss in this way.
Mr.. Sawyer admitted that he was and
said that he had to take that risk in the
business. He lost $40. coo at one "clip" in this
way and at another time q rival company
had lost 800. 000 by c~onsigning wheat to
London and buying options against it here.
through the home and foreign IN arkets
working exactly against the company's
interest. Something had been said about
the high prices of farm products. twenty
prices of to-day. Farmers then had q
tariff on everything they exported. though
they did not know it. The tariff was the
premium OF gold. wheat advancing lie with
each van OF q cent in the premium OF
gold. The cost of labor. however. did not
advance for some time. so that the farmer
was getting cheap labor and high prices.
Since the resumption of specie payments
the price of labor had not receded while
the price of products had declined.
H. III. Aldrich. of the Chicago Board of
Trade. was then gwen an opportunity TO
finish the statement he had heretofore
made. He said yesterday the statement
had been made that any other explanation
of the decline In prices of cereals h
short selling was childish. 1t was per-
haps worth coming to Washington to hear
that Edward Atkinson. David A. Wellsand
the expert of the Department of ARrlcult-
ure were children, aud he read from articles
by these men to the effect that prices In
the law of supply and demand throughout
the world. Short selling. to his personal
knowledge, was very common twenty-five
years ago. 1t had been stated that offer
ings were unlimited. 1t was hardly
necessary to attempt to disprove that
statement, because, If it were true, prices
would fall to almost nothing. IL was not
the short seller who caused the great and
sudden declines IN prices. but nearly al
ways it was the man who was long on the
market. He became tired of carrying the
market and depressed prices in his efforts
to get out. 1t was not to the interest of
the short seller to depress prices. except
for the time being. n he did not endeavor
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he could buy back at o profit. The most
active and persistent buyer was the short
seller seeking to close ont his contracts.
Mr.. Moses asked if spot wheat. which
was the wheat the farmers sold, would not
be higher II futures were done away with.
MIR. Aldrich said that If too much wheat
was not sold the price now might be bet
ter, but In May IL would be lower. and the
speculator. owing to the 10 wer rates OF in
terest he paid. could carry the wheat
cheaper than the farmer.
Mr.. Hatch asked if there would not be q
healthy demand all the year round IL the
system of buying futures was abolished.
Mr.. Aldrich replied that possibly that
might be SO, but the miller who made bis
European flour contracts six months ahead
could not, without the future system, agree
to deliver flour abroad, because he did not
know the price of wheat six months hence.
The time given Mr.. Aldrich having ex-
pired, he filed the articles he had quoted
from.
Mr.. Hatch eaid the members of the COM
mittee who knew the expert of the Agri-
cultural Department, who had been quoted
lStatistician Dodgel. would know what
Every tobacco-dealer remembered that his
report several years ago upon the tobacco
crop. which report he published in advance
of the crop. bad cost the tobacco growers
of Kentucky. Virginia. North Carolina and
other States % per cent. Of the value of
chair prnn MA nodna wQa rnmnollad fwn
or three months afterward to take back the
report, after the farmers had been robbed
of a large part of their crop.
Mr.. Funston, of Kansas-If you want to
lmpeach MIR. Dodge you had better give
him o hearing.
Mr.. Hatch-i will be very glad to do so;
the gentleman from Kansas is familiar
with the facts, and they are as l have stated
them.
Mr.. Funston-I would prefer to try Mr..
Dodge before we hang him.
H. Mattulath. of Minneapolis. next at
tackled d%ealingsin futures as "wind-sellina
that injured the producers. The greater part
of the trading in wheat was done between
October and April, and during that time
the farmer had to accept the depressed
prices caused by the short seller.
be a bulge in prices, but that did
not benefit the farmer. because he
had previously been compelled to sell his
" VI aSNk nv
saw the unlimited quantities Of wheat the
seller of wind offered on the market, be-
came fearful that consumption would
never catch mp under such circumstances
lost heart and dropped his contracts. No
body could tell which was actual and
which was "wind SELL" and. as q conse-
quence of their being 100. 900. 600 bushels Of
wheat sold where only 90, zoo, 900 bushels OK
listed, prices were kept down. Usually
there was q period of about for months
between the selling and the buying of
wind and as May came around the
speculator made another turn by selling
July delivery, which, to o considerable ex-
tent regulated the price of May wheat.
He compared short selling to the issue of
stock in excess of the capitalization of rail
road company. No one, he said. bet on races
on belief as to which horse was the fastest;
what the better wanted to know was how
the jockey had been manipulated. The
wheat %speculator did not concern himself
so much about the crop and higher or
lower cable prices. but asked what Par
bridge and other large traders would do.
People had become tired of losing money
in this way, and consequently the volume
of business had become smaller. The
speaker then criticised the old Butter
worth anti-options bill. II laid before
the committee o measure he bad framed.
1t was In it's main feature similar to the
options bill now before the committee. 1t
requires that sellers of farm products must
prove that they own the things they sell;
that sales shall be recorded by the govern
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