The Washington herald., 1914-11-22
ExpIosiOn Of an IdIe Theory.

The great war in Europe has, of course, brought
a host of evils From many of these evils our own
country is suffering and win suffer for long time to
come. But there is certain compensation in all ad-
verses and one of the compensations to the United
States from the European war is the lesson that it
has taught to large number of people IN our coun-
try and especially people in the South, OF the use
funess of unrestricted markets for commodities like
for instance those provided by the cotton exchanges
The idea pops up regular intervals in pretty nearly
all civilized countries that future" markets for
commodities-th is to say, markets where options
are dealt in for the future delivery of these COM
modities-exist for speculative purposes alone and
fulfill no function other than that of assisting in
gambling operations.
1t has done no good to remind critics OF this sort
that all business absolutely legitimate business
so-called is, in sense speculative and necessarily
partakes of the nature of venture attended with
risk AS long the future is uncertain so long will
man be unable foretell prices for any commodities
a month or six weeks or even few days away And
it has been almost impossible to convince people that
the fundamental services performed by the option
markets far outweigh any disadvantages that accrue
from their use in pure speculation, by people who
desire to make wagers upon price fluctuations. There
was proposition in Congress this year, which was
with difficulty defeated, for an absolute abolition of
Oui SOtlOh SAShdIBSSY DdSCu on unSOunQ
notions that commodity exchanges were gambling
places and nothing else.
Now it has about that for nearly four
months the Southern producers of cotton (who have
asserted in the violent fashion that the activity
of the cotton exchanges worked in the most grevous
way to the injury of the planters and kept cotton
prices unduly low have had opportunity to dis
cover Just whether long closing of the cotton
changes really does help the cotton planting business
or hurt it The cotton trade suddenly called
upon to confront the entirely problem of doing
business under virtual embargo laid upon trade and
commerce by the great European war. Exports Of
cotton from this country to dead stop, chiefly
because it impossible to ship cotton abroad and
get payment for it through any international bank
ing system.
Consequently, there came up a proposition that
the government 4 private pool should buy and
hold vast amount OF cotton; but it was obvious
that this proposition could be carried out
unless market price for cotton was set up as
standard; and it at length made very clear that
the only way in which market could be brought
about was by opportunity for the free play of
different views fair price for cotton, enter
tanned by planters, dealers, traders, spinners and
even spectators of every description. 1t was made !
plain that all these act according to their best
Judgment for the purpose of making a profit for
themselves and that this is what invariably charac-
terizes business operations as a whole. The very
words "the law of supply and demand" mean that
supply and demand must be brought in relation with
each other, and this relation is supplied by broad
and unrestrained market. Then, only, buying is
stimulated which has previously been held in check
With the starting up of our cotton exchanges
again, the European demand for cotton, which has
held off because there way of determining ;,
what fair market price for cotton was is once more
asserting itself. Once more the utility of markets
and Of option markets has been demonstrated and /
The path has been cleared and we hope an end has
been put to all this idle talk of orbiddng people by
aw from buying and selling futures"