Saturday news. (Watertown, S.D.) 19??-19??, 1915-04-08
Bv n. l.. Loucks.

By H.. l.. Loucks.
One OF the emphatic claims made
for the grain exchanges is that the
option trading in futures insures an
.'open market" The bucket shop
conducted on the same principle was
intended to give the little fellow with
a dollar or two d chance TO help ana
the grain exchanges spent a large
sum of money to prohibit them, and
succeeded.
| assert positively, and challenge
sRccessful contradiction, that me
Chamber of Commerce n BOARDS u
Trade grain exchanges do not pro-
vide an open market for Il grain,
but the reverse. The door to the
trading floor Is carefully tiled by door
keepers to prevent the entry of any
one except members, o their 90
ployes. Now suppose that a large
producer of grain wants to see how
his and his neighbor's grain is hand
led In this alleged open market, or
ganized for the special benefit of he
FARMER. he will meet with several
surprises.
Surprise No. /. He walks with
confidence to our grain exchanges
and 10. when he tries TO enter he IS
challenged and refused admission,
In establishment he asks, What; Is
not this u grain exchange, our open
market? am a farmer; a large
grower of grain and called to see
how II grain is handled" Nothin'
dom. Then pedhaps Mr.. Farmer
thinks of a commission man to whom
he has shipped in the past and IN
auires for him. or course the c, NJ,
is glad to see him, and escorts him
to the s~ecretary's Office, where he IS
introduced, vouched for and after
due investigation and registration
he Is given a visitors card and is es-
cnrted to the floor of this open mar.
ket. Mr.. G. NJ. is very polite-they
all are--and he Is shown around n
introduced to the notables who have
done so much to provide this open
market for the independent farmer
who is very much flattered with the
attention. In due time the menag-
erie in the pit opens. The yellow
alps OF paper begin to wave. the
scare begins and pandemonium
breaks loose. Futures for Septem-
her had already been sold for 50
cents below cash, and another break
of seven cents was soon registered,
Mr.. Farmer shares in the excitement.
He is given q tip mot charged for1
that because of this or that the price
Is sure to go lower. and that he had
better protect himself by selling his
wheat befoSe the bottom drops cut of
the market altogether. He accepts
the suggestion and advises the G. NJ
that he would like to contract for the
sale of his wheat for delivery next
September.
SurpriRe No. !. Mr.. Farmer Is
told that he must not even dlscass
sneh a thing. Why2 Because Q
are not a member. and would De
promptly syicted from the room II
caught. and the c. NJ penaliEed IN
addition. Again he asks, is this not
the farmers grain exchange and an
open market??' Yes; but open 70
members OF the exchange only. Cant
4 sell my wheat heree No. Are not
these me in .the pit. selling wheat
for September delivery? Yes, but
1t is really not wheat; it is an option
to sell wheat; You see that fixes the
price, the price OF your wheat for
next September. Insures a market,
you know. Insures the value. etc. al
great modern device to protect the
farmer. Well. if / can't sell my
wheat, can't ] 60 over there and get
an INSURANCE contract as you cali 1t,
an option? No. no, you are not ~
member; but / can sell an option forI
YOU. Please explain. Well, / will
sell an option for 5000 bushels of
wheat for you for future delivery, |
say. September. There are only. cer-|
tain months We can sell for. Ii viii
only cost you one-eighth Of d cent
as commission per bushel, and a like
amount to buy it again. Ali right,
go ahead But we will have to have
q cash margin first, says Mr.. c. III.
"A margin What is that for? On,
that is to insure me against loss inI
the ease the market should 60 up
SWhat2 thought you said that this
future selling insured the value, ixedl
the price, etc. Yes. OF course it does.
and that Is very important, in faetl
we could not do business without 1t;
but must have a margin to PROF.
y