The Washington times., 1921-06-03

why do we have subsequent collapsss
In pricesr
Why are certain goods dear at one
season of the Year, And why are they
cheap at other seasonal
The answer, In rev words, 10 that
these ups and downs usually are pro-
duced by uneven demand and by I'M
even production.
STAPLE PRICES.
Take prices for such staples as
grain, cotton, eggs, butter. During
! the seasons when these commodities
come upon the market in largest vol
ume, prices are always relatively
low.
Whyf
| Because the supply temporarily 10
In excess of the current consumptive
demand. Later on production of grain
and cotton ceases. of course, while
the winter months produce less but
ter and eggs. AS the demand con-
tinues prices naturally rise.
| Is It not clear, therefore. that the
aim ought to be to have the supply
come on the market in even volume
| all during the year so that prices
would remain as stable as possible?
used to live in q country where
there were no cold storage facilities
and there were seasons when perish
able foodstuffs simply couldn't be had
and other seasons when the producers
got cruelty little for their products.
Now, we in this country have gone
quite some distance toward solving
the butter and egg and like problems
through cold storage. BY holding
surplus commodities until they are
needed for use. at least q partial
brake IL applied to prices.
OF course. cold storage facilities are
often abused by inscriptions dealers.
But, on the whole. cold storage Is
Internationally tremendous blessing
TO the people.
Ways and means have also been
devised for preventing grain and cot
ton prices from tumbling headlong
when the crops are harvested and
from soaring out of sight before an
other crop natures.
| Exchanges have been organized
| where a grower can arrange to sell his
grain OF his cotton months in advance
and know exactly what price he will
| receive.
In the same way the user Of cotton
or grain can contract for deliveries
at some distant date at . specific.
| agreed upon price.
| Obviously, this reduces the specu-
Iative element entering into the book
| ing Of orders for, say, cotton goods
for tho following season by cotton
manufacturers.
"DEALING IN FUTURES
| These operations are called dealing
in futures" This is because both
buyers and sellers can thereby know
exactly how much they will receive or
how much they will have to pay for
the commodity dealt in, when they
sell or buy months later.
These dealing. in futures" per-
| form a sort of cold storage service
for both producers and consumers.
The Senate, howsve- Mas before II
bill aimed At these dealings in
grain futures" Cotton growers
also have voiced protests against
similar dealings in cotton.
| The growers feel that they become
the victims of rank spectators who
can, the growers imagine, manipu-
late quotations up or down at any
time.
The chief argument used is that by
| selling what they do not own and
promising deliveries on certain flu
ture date spectators can depress
prices But these sellers have sooner
or later to buy exactly as much ss
they sell.
| II legislation were passed to stop
dealings in futures" the worst suf-
ferers would be the growers In the
nrst instance, and the public, in the
second instance, because prices
would tumble headlong during, and
Immediately following harvest oper-
attons, because of enforced selling.
and by and by prices would rise as
the unconsumed supply decreased.
1t would be a case OF, hrst- feast
and then a famine; first a giutted
market and then a market meagerly
supplied.
| Manufacturers. not knowing how
much they would have to pay for
raw materials later on, would tag
on quite an amount to their selling
prtces for goods for future delivery
IN order to safeguard themselves
against the danger of high prices
when they came into the market for
materials.
Az very few, manufacturing con-
Germs can buy a whole years mate
rails at one clip they would Do at
sea at TO the future of raw material
prices. hence would have to become
specu,ators when Naming prices for
goods for future delivery.
To place a ban upon the dealing
of produce. cotton and other ok
changes would be to take a step, not
forward, but backward.
1t would bring no lasting beneht to
any one-except, perhaps, foolish lit
tie spectators who get into their
heads that they can outmaneuver tbs
brainy individuals and concerns that
| mako a business and a scientific
study of dealing on these EXCHANGES.
That the machinery furnished by
such exchanges is often flagrantly
abused by "insiderS Is, unhappily.
only too true.