East Oregonian : E.O. (Pendleton, OR) 1888-current, 1920-12-11

4
at central markets, and relatively
high prices for flour to the consumer.
Would Force Mortgage System.
Fourth: The grain trade trust
would be forced to adopt the mort
gage system" of arriving at a valu-
alton low enough to be considered e.
tremely conservative. then a further
large discount would be necessary to
arrive at price TO pay the producer,
so as to provide an ample margin Of
safety against decline. or delay in ef-
/ fecting sales to importing countries
or for shipment to domestic miliers.
The adoption of some such system by
the grain trade or trust would be
absolutely necessary as a substitute
for the present insurance feature of
facilities for hedging unlimited quan-
titles of grain upon the speculative
contract markets. The simple hedg-
ing process is now part of the bus
mess Of taking care of the crop
movement and storing of supplies in
country and terminal elevators. Tn
I less grain in store is hedged. the own
ers are necessarily taking speculative
risks in their regular business. No
conservative concern with view to
remaining solvent would hold un-
hedged grain, with easy access to the
present contract markets.
When the farmer sells his spot
grain. it is cash transaction, he
would reject a credit proposition.
Therefore the marketing of all crops
required in The aggregate, huge sums
of money. Accordingly, the necessary
financing must be concluded. Ina
bility or failure to hedge supplies
would throw the financial side of the
process completely out of order. The
banks would hesitate to extend ac-
Recommendations on such uncertain cell
lateral, except at a still further dis
count. Under present conditions.
grain, hedged and insured is classed
With the best collateral; there flows
annually a great tide of funds from
the financial centers to the grain, and
cotton belts for crop moving pur-
poses.
Eliminate Market Itself.
To eliminate speculation would
mean the elimination of the market
itself. This would only turn the cash
grain business into a highly specula
tive one and necessitate the entire re-
Organization Of the milling and graia
industries. The entire toll on wheat
is now only to 10 percent for all
handlers between the farm aud for
eign market, not including t:tnsonr-
tation. Speculation takes no tribrla
from the farmer or the COZ sunter
Speculation in grain futures merely
giN es volume and breadth to the mar
Tot, thus making Il possible to buy or
sell unlimited quantities IF grain with
q minimum of fl-lctuation. \ market
without liberal speculative participa-
tion is subject - violent change Of
price when an effo,t is I.ade TO buy or
sell sizeable quantity Speculat On
is conceded by cur foremost econA-
mc and financial authcrities To- be CT
essential part of the general business
structure. not only in commodities,
but in securities.
when the Government removed its
minimum price basis and restored
wheat to the open market five months
ago, if speculation in the contract
NnAIkelS Htu at lHc SdfuS NAiut hNSh
banned. wheat instead of subsequent /
ly declining by fractions of n cent, |
giving all a chance TO sell to adjust
their affairs, would have collapsed,
with the financial casualties so enor-
nous as TO precipitate the greatest
panic yet.
For some time il has been impos-
siblo to obtain dependable quota
ton on wool It is said there is no
market, no demand, or some ridicu-
lous price is reported as hear-say,
There is an occasional auction held. |
The trouble is, there is no regular fu-
turc contract market, where the in |
vesting and speculative public may
buy, as they no doubt would, II any |
thing like the latest rumored price
were quoted on7a reputable exchange,
Unfortunately wool. like the Japanese !
silk- I,,apl.el ssollet Nd -. i..,.sll - j