The morning call., 1894-02-15
HAS CONFIDENCE.
Broker McGlauflin Looks
for Improvement.
SAYS PRICES MUST RISE.
Does Not Fear an Overstocked
Wheat Market.
HIS hackers BELIEVE IN HIM.
A Brief Explanation of the Present
Precarious Condition of the
Local Market.
HIS hackers BELIEVE IN HIM.


ations in wheat Wheat has never been
so low before in the history of the coun-
try. and it is reasonable to suppose that IL
will not remain so"
The words were spoken. not in the
spirit of Wanted overconfdence but In the
quiet assurance of man who knew, or
thought he knew, what he was doing. II
am not buying what l cannot pay for"
continued Mr.. McGlanflin, ''or making
claims which l cannot meet, or undertak-
ing things which | cannot carry through.
Brokers know this of me, and ny credit
on the exchange is accordingly unques-
toned. The people for whom l am work
ing have confidence in me. | have done
work for them and for others here and all
over the world. and none of them has ever
been dissatisfied with what have done"
When asked about the article prin ed in
yesterday mornings CALL, Mr.. McGlaut-
lin said that he could see no danger In the
present situation, nor could he see that
there would be any danger when the set
Elements of May are called for. But all
his hopes and judgments are based on The
confidence of return of better prices.
How do you get arOuu d the plain fact
that already more than a full years stock
Is stored, with virtually no demand Tor 1t,
and that In the face of this an immense
fall crop is coming on?' was asked.
A shrug OF the shoulders was the first
answer. How IAN 1t do otherwise than
adjust ltseE?'' was the final response. "Such
condition has never prevailed before Ii Is
matter OF business 10 presume that is unnatural
and will moi endure"
"It is a question, then, of how long you can
wait for readjustment and stand losses in the
mehutlmeY '
Mr McGaufn had no answer to this ques-
tiOn, but left the impression with the reporter
that lie had no fear concerning bis resources.
Notwithstanding all that Mr.. McGlautiin here
says, The situation OF the wheat market Is prac-
tlcaliy that which The CALL described yesLer
day. The manlpuiatiOns OF McGautn and
those who are with him havA introduced an
artificial element into the Exchange which is
necessarily unsafe and 10 no inconsiderable
degree menacing OF course, speculative
market is capriclOus, ana new elements may be
introduced at any time which Win alter the
whole aspect Of things. but at present the ap-
pearance OF affairs justhes careful public scru-
tiny.
IN facts appear to be that the market is over
stocked universally; that there Is practically
no wheat moving from California; that there Is
aO immense acreage In prospect for the fall /;
that trading in spot wheat has ceased and thai
spot wheat is being sold as May wheat; that
Inc price wen OF the latter Is constantly decin-
Ing and brokers are losing considerable money
on It. On May 1 The price Of spot and May
wheat must become the same, deliveries VIII be
called for aud settlements must follow. linen
Will come a critical time.
III order that readers may understand the sit
uatlOn II is perhaps well TO explain how opera
IL
All the wheat dealt in Is stored In the cali
board Warehouse. piled in lots OF 100 tons. 1t
II is purchased by brokers In one OF two man
ners. either 70: immediate delivery at the time
of the purchase, In which case 1t Is call,
spot wheat; or for delivery in the future, in
which case II is deuominated according o three
customary pei iods of delivery, May !, Septem-
Der l or December 1. as May wheat, September
wheat or December wheat.
Transactions in "SpoI' wheat are as ord-
nary business sales. Orders are delivered at
once and settlements made accordingly, the
profit TO the Speculation coming II ON The mo-
mentary fluctuations III The pre-. But transac-
lions In wheat OF given dates are dealings in
futures. An order for May wheat to-day means
thai STOCK is bought that is 10 be d ilgered on
May 1. broker buys 100 tons at current
rates 10 BE- delivered ay l. He does MOI pay
for IL at once, but inspects IL IL stands in the
warehouse, assumes the storage expense aud
pays the Insurance, awaiting Tie date of delIv-
cry. On the DAY Of It's delivery II ceases to be
May wheat and becomes spot wheat. He pays
for it, therefore, uoI what he bid for ii in the
market say hfee months before. but what spot
wheat is actually selling for in open ma ket.
In buying Tor the future there Is always a
risk Of tucluation Iii price. The difference
that may arise is what bro call a "margin"
The pIIce al The day of delivery may he less or
more than ii was at date OF >ale so there is a
risk TO both parties. To cover This each puts
up margin over the selling figures of 5000 for
each ton. When The pIIce goes down the
amount of decrease is deducted from the buy
er's margin; when II goes up he seller pays
the difference. OF course there are slight fiuc-
Tuations every day or TWO or three Gays. but
collections are MADE only when the huctGaton
amounts TO about 500. Collections cease
when final settlement Is made at the actual de-
livery of the wheat.
Now, the state Of things in the San Fran
cisco mark Is IS as follows, according to a
prominent broker:
THE price OF wheat had ben going down
until last August, when 1t reached 81 20 per
Genital. AT that time tr de in spot wheat prac-
iicaIly ceased. Without apparent cause or rea-
son Met5autn & Co. and others came sudden
ly INTO he market, buying for December /
Prices aho
Liverpool figures. Brokers converted their
spot wheat iDl December wheat, aud .hipmen
ceased carrying stocks abroad. AT the approach
OF lime Tor actual Decembei deliveries Nc
Glaufin & Co. stopped buying. Then Decem-
ber passed and JANUARY came on. McG ufln
& 20. and others commenced buying. this time
for May wheat. Again brokers converted their
spot holdings into futures, and shipp, rs ceased
10 carry. A higher price by considerable was
Otfee 0 for May than for spo wheat. This was
In consistency with the theory which Mr.. Me-
Glauflln announces in this mornings paper
that the stale of prices must eventually i'm
prove. But it was TO the serious detrment of
Caifornias inte ests In the minds of many Ie-
fectiye brokers'"
"Uuder normal conditions" said another
e broker. "the difference IN price between futue
and spot VIII at shou be very slight. Nc
Glaufn has created dtfe ence OF nearly Il
cents d GENITAL. " hen spot whea is at 80 or 80
cents aud May wheat at 81 o3as broker
naturally holds spot and offers 10 as May
for the difference mOie than pays the interest
on capila al invested. the storage and Insurance
charges. The ship er chooses the same course
Foi eign demand for the local pfOdnct Is in
active, and the spot wheat is virtually idenu-
cal In price in Liverpool with that here. and
there is no profit in cargoes. By these causes
The entire stock Of wheat Is held back In The
local market. When he summers crops come
on HE farmer will feel the reaction.
"It Is possible Iha an unexpected demand for
wheat may arise between his time and May /,
which would force all prices up. IL Is possible
that McGlaufiin's hopes may prove We'll
grounded. bus the fact mains now that a
great deal OF none IL being lost on margins"
Yesterday II was said on the Exchange that
Inc shorts" wsre buying somewhat, as the
mari Ell took himer tone from sympathy with
the East In the morning. On Tuesday Nc
Glaufin himself sold small amount and Ii is
SAID that lie Is hedging right along. II was also
rumored that the coming OF PluDger Partridge
10 The city from Chicago had some connection
with McGlauflh's plans. For this however,
there seems 10 be no foundation. The methods
of lartrldge are well known 10 be diametIcaily
opposed 10 those Of McGlaufiin and the two
have never been known 10 associate bitbe rto
The local man smiles al the suggestion Ut their
coop ration.
TIL amount OF wheat in the State on Deem
Der was 712. 900 tons; the year before at The
same dale II was a little over 100000 tons.
Tho anuaUed shining fOnnapp i'm ,iuhf this