Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1917-07-01

the element OF uncertainty inherent In
futurc conditions.
city baker. for example. knows
that on the first OF August he will
need 10000 barrels of flour. That
nour may be non-existent; the butter
mes may be futterine over the wheat
'hat VIII make II. to p~araphrase Cen
erai Ioethals. But none the less your
paher can go to n miller and contract
,or lie hour at a given price. The risk
. nus transferred to the miller. He
mas bound himself TO deliver flour at
a given rate. and If the price of wheat
shouio oouoie In the interim it might
break MIN. But he can 20 into the
market ana buy the unharvested wheat
Tor future delivery. He consuIts the
future" price before he makes his
contract he takes no risk at ALL.
neeause ne taxes no risk. he cannot
legttimately demand exorbitant profts.
And the price he pays for his future,
wheat is fair TO the farmer. because
the future quotation is based on the
condition Of the worlds wheat cron
and Is normally the most accurate nos
sible forecast OF the value Of he com
Ing wheat crop. Many farmers ara
under the Impression that the trading
In futures is opposed to their own best
interests. There is a future market
for wheat. In "A normal year. 81 per
cent OF the ultimate price OF the wheat
goes to Che farmer. There is no fu.
ture market for barley nor for pota-
toes. In n normal year, So per cent
Of the Ultimate price OF the barley
goes to the producer. and only IS per
cent OF the ultimate value Of the po-
tatoes.
The consumer. the city man whose
dealings are with the bakery. Is prone
TO think that the future trader is the
man TO whom all his woes are due.
Future trading in wheat Is Just az
necessary from the ultimate con.
sumer's point OF view as i, is from
inc producers. BY reducing the ele-
ment OF risk. II cuts down the profit
or middlemcn. BY It's system Of reach
ing ahead. IL smooths over the UPS and
downs OF prices that follow unexpected
development in the grain situation.
~ irons the price curve from Il Jagged
line into II long. smooth curve.
rms summary is not q defense Of the
board or Trade or the Grain Exchange.
There have been numerous buses OF
the system. and there are a dozen tech
meal ways in which IL can be iuerIed
to benefit the operator at the expense
or the plain citizens on both ends-the
farmer and tho consumer. The best
hho"n. OF course, Is the corner. wherein
4 Spectator tries to buy up all the
grain In sight and use his monoroIv
Tor eStor'ion. In such a case the future
49, 't5 ~ 'AGI III TPAl NJ ~
or the grain. Az soon as this is tho
case trading In futures ceases to be
a good and becomes "A serious evil. AS
long as the Board OF Trade lis an adj
)unct TO the grain business II is a good
thinE. II ts an insurance against price
fluctuations and in some form such
an insurance must exist. or there can
De no trading except on wide MARGINS.
But as soon as the grain business of
the country begins TO be a mere adj
)unct OF the Board of Trade, then il ia
time 10 take down the family shot
gun and proceed TO resist invasion.
Ihe immediate question is: What arc
we going TO do about IL: The Grain
~r.HchanSe is a necessity. but II lis an
institution quite capable Of being
abused. Spectators have even been
known to abuse II. The answer. unless
all the signs OF tho times are wrong
seems TO spell government regulation
a strict Federal supervision Of ali
dealings would permit the legitimate
trade 10 go on and stop all attempts
TO use the machinery for Legitimate
purposes. A policy OF enlightened
supervision" is what Mr.. Brand. OF m.
once OF Markets. sees as Indicated.
IL may he stated with authority that
whiie the pending legislation carries
broad authority in many directions,
that authority will be used to remedy
abuses in existing institutions wher-
ever such a course is possible, rather
than to replace them with new and
untricd ones. This formula seems 10
Mt the case Of the Grain Exchange.