The age-herald., 1898-11-17
Warrant Pla Iron.

Mr. Swank, of the American Iron and Steel association, claims that the pressure of warrant stocks is a special cause of the low price of pig iron. They operate, he claims, as heavy weight upon prices. The warrant stocks stood at 25s,OOo tons on July 1 last, as against 112,OOO tons two years before. Warrant stocks are. of course, sur plus stocks. They represent in part the production that is beyond consumption; but MT. Swank claims they are particularly hurtful on account of their speculative na- ture, and because of the facilities they offer for obtaining ready money. They en- courage, in other words. additional pro- duction.
 President Hull, of the Warrant company denies that warrant iron is heavy weight at all upon prices, He says the great bulk of warrant iron has never been offered for sale, and he shows that the large sales have invariably been made in advancing markets. He shows that the year 1897 op- ened with stock of 1,141,696 tons and closed with 1,O42, ,SS2 tons on hand. It Is the 
 size of the general surplus that determines prices
 MT. Hull shows that the warrant yards hold scarcely more than a weeks produc- tion, and that the entire surplus is now about equal to three weeks production. This certainly is not over-production. Great Britain, on the other hand carries a six months stock. The price of pig iron in this country, MT. Hall claims, is due to the dependence of the producer upon the consumer. It Is not so in England, where the warrant system has been built up and strengthened. The English producer does not sell for future delivery except by war rant. He cancels no orders. He compels the buyer to take all purchases at con- tract prices. He Is. in word independ- ent of the consumer. He takes contracts in foreign countries, covering term of years, and he protects himself against huc- tuations in prices through the warrant sys- tenn. Mr. Hull thus illustrates the method:
 We will suppose he has taken a contract which will consume 5000 tons of iron or steel, and which will require five years to complete; he immediately closes a contract with his warrant dealer for 50.0o0 tons of warrants at the market price. The warrant dealer contracts to carry these warrants for him as long as desired at charge of cents per ton per month storage and a nominal interest rate C perhaps 1h per cent per annum. It may be a year before the builder is ready to give an order for the first 10000 tons of steel to be used in his work, but when he gives the order he sells an equal tonnage of his warrants. If the price of steel has advanced the warrant iron has advanced, and he is thus protected on each order he places during the five years.
 The British system has created an inde- pendent producer and an independent con- sumer and the system by which these war rant dealers lift the risk of fluctuations from the shoulders of each is not specula. tive but Is as legitimate and useful as the insurance and banking business. Just as the bank must hold a reasonable amount of gold as a basis for it's circulation, and the insurance companies hold a. certain amount of solid assets to protect their pol icy hoIders, SO the warrant dealer must hold reasonable amount of warrant pig iron to protect his contracts and dealings.