The Holbrook news., 1920-12-10
SHORT SALES"

From the grain states of the mid dle west there comes to congress an insisitent demand that federal legis- lation be enacted to restrict, if not to terminate, what are called 'short sales'' of wheat and other grain It is asserted that the sales of grain sometimes are many fold greater than the actual grain in existence, and that the "short selling" of grain tends to reduce the market price, bringing consequent loss to the far mer and Encouragement to food pro duction.
 There are some who urge prohibit tion of future sales,' but it is be- lieved by others that there is justifi- cation for some sales of wheat which the seller does not possess. For ex- ample, a flour manufacturer desires to make sales to his customers. In order to make a price on his flour, he must know the cost of the wheat. In order to be reasonably sure as to the cost of the wheat, he must make contracts for delivery of wheat at his mill. The miller makes contracts not with the farmer direct but with the owner of an elevator, who will buy grain from the farmers when the grain has been threshedl. The elevator man, therefore, makes a contract with the flour miller to de- liver wheat which he does not all ready possess, and the miller in turn takes orders for flour which he has not yet secured. Most people recog- nize a transaction of this kind as llllculslluuuuuull p;Iitt ds'ai jar cpd perfectly legitimate. Manufacturers of all classes take orders for goods which they have not yet made, and sometimes for goods for which they have not yet purchased the raw ma terials.
 But the great majority of those who protest against "short selling' of crops are aiming their objections at those transactions which are pure gambling and in which there is no intention that there shall ever be any delivery of actual grain. These are sales made principally on a mar gin, the seller paying the difference in cash if the price of grain should go up. It is apparent that the short seller, whether he be a short ~seller for purely gambling purposes or for actual delivery of grain, has a selfish interest in reducing the price of the commodity, for if, after he has contracted for the delivery of a certain quantity, he can purchase at a lesser price, he is the gainer by the amount of the difference.
 It is claimed that in some re- spects agricultural producers are the beneficiaries of advanced sales of crops yet to be raised. Cannery men, for instance, contract for a part of their output in advance of the can ming season. They are selling fruit or vegetables which they do not yet possess, but having made contracts for the delivery of their canned product, they are in a position to buy promptly from the producers when the crop is ready for harvest. Without these advanced sales of the canned product, there might be no adequate market for fresh fruit, which would therefore spoil on the hands of the producer.
 Because of the tremendous drop in the market price of wheat, corn and oats, causing enormous loss to the producers, this whole subject of sales of futures" is of particular i'm terest to farmers at this time, and it is certain that the subject will be pressed upon the attention of con- gress with a demand for legislation The nature of legislation which would be beneficial to the business of the country as a whole will there fore be extensively discussed not only in Washington but in agricul- tural and trade circles throughout the country. O.