The sun., 1917-08-22
PASSING OF THE PIT.
A Veteran wheat Dealer Shows Al.
vantsges From Q Market for Futures.


vantages From Q Market for Futures.
TO The Eprroa ov THE SuN-Str: Your
readers are indebted to you for an en-
tsrtaining editorial article last week on
"The Passing Of the Wheat Pit" But
II u apparent to one who reads between
the lines of your closing paragraph that
there Ii something more potent In this
subject than an opportunity for ironic
eulogy Of the past masters Of wheat pit
speculation.
The closing Of option trading on
grain exchanges Ii q most striking IL
lustration Of the effects of an insidlous
influence at work in this land. which
takes the form Of an appeal to the
patriotic cooperation Of business men
with those in authority respecting
matters Of public concern. looking to tho
support Of some mysterious programme.
not clearly defined or even outlined.
upon the success Of which is supposed
to depend our efficiency in prosecuting
war against the enemy. It is the pur-
pose Of the writer to demonstrate that
the abolition of trading in wheat op-
tlons late last spring was the result of
misguided zeal and has, in point of fact,
served to defeat tho very object which
It was sought to attain.
Permit me at the outset to establish
claim to disinterestedness by the un-
qualified statement that have never
profited. or attempted to profit. directly
or indirectly. to any extent Whatsoever.
In any operation which may properly
be described ~ gambling or speculation
in options or future deliveries Of wheat
or other grain. am associated with
one Of the oldest and best known mill
ing and fiour exporting concerns in New
York city, and am in q position to know
that any artificial operations or gam
bler's tactics to stimulate or depress
market prices Of grain works an injury
to such legitimate business as ours has
been FOR over q century.
At this point will preface my state
ment Of evidence indicating the mex
pediency Of eliminating option trading
In American grain markets by quoting
from . trade letter dated July %. and
addressed to correspondents in this
country by Messrs. Pillman & Phillips.
prominent grain merchants Of Liver
pool. England. The closing paragraph
Of this letter reads
1t 10 announced that the price Of bread
10 to be hxed in the near future at nine
pence per four pound loaf. This seems to
be the result Of pressure b the labor
parties. Probably the "unsought millions"
which came to the wheat commission as
the result of their option deals will be
spent In this way. We believe that bakers
cannot pay more than AIS. Cd. to sos per
ESQ pounds of nour as to probably
supply bread at the oflcial price.
1t Is worthy Of note that the success
full contamination of these wheat deals
Immediately preceded the beginning of
agitation which resulted in the suppress
sion Of option trading. The immediate
result Of these highly successful and no
doubt wholly legitimate operations was
to work injury to every class Of people
In this country. including the grain
gamblers, except such producers of
wheat as were fortunate enough to have
held part Of their wheat crop on their
farms or In cooperative elevators. This
Injury was not ameliorated nor cor
rected by the closing Of grain exchange
operations. 1t served rather to accen-
tuate and aggravate 1t.
The perfectly legitimate machinery
constituting the grain exchanges had
bsen taken advantage Of by non-do-
mestic interests to effect q control of
grain supplies. Why was 1t supposed
that by inducing these exchanges to
close tho harm already perpetrated
could be undone? The grain exchanges
have for two generations formed q
necessary adjunct Of the processes Of
marketing. distributing and milling the
great American crops. Their functions
have been no less useful to the farmer
than to the miller and merchant. The
public might have said with equal logic
I'VE will control or eliminate speculation
In foreign exchange and industrial
finance on the part Of great bankers
by closing all clearing houses in the
United States This Illustration is
used advisedly. because grain exchanges
are. In fact. great clearing houses the
functions Of which are indispensable to
merchants and millers who employ their
capital in distributing to the consumer
hour and feed produced from more
than 600.0o0.00o bushels OF wheat, which
felps to feed annually our 100, 900
people.
Without the protection afforded by
transactions which merchants and mil
lers alike must make through these
grain clearing houses they will not and
cannot afford to take the enormous risks
involved In taking the farmers crops
at fixed cash prices and in providing
stocks Of wheat to be ground into flour.
Already many large mills have not a
wheel turning because, were they to
purchase the required stocks Of wheat.
they cannot sell option futures to hedge
against loss consequent upon price
depreciation. Their relatively small per-
centage OF profit does not Justify the
risks Of heavy losses. The total grain
In all wheat elevators OF the country
amounts to less than l6 per cent. Of the
normal stocks held at this time Of year.
This reflects. first, disposition on the
part Of farmers not to sell. and second,
unstabilized market conditions which
discourage the elevator men from buying
wheat at any price.
hold no brief for the wheat gambler,
but even his participation In the opera
tions on grain exchanges has not always
been an unmixed evil Many time
your dyed in the wool speculator has
been caught short when crops proved
unusually heavy and the accumulation
OF short interests has served to pro-
vide market and by the same token
a better price than the farmer would
have otherwise received But 1t would