The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1921-01-27
Explanation Of Proposed Bill
To Eliminate Short Selling
In Grain and Cotton Trade

oHi an article ny Senator RrIhuT
II the present system of marketing
gram and cotton through speculative
e1cnanges dealing in futures is de-
siraole system and defensible, then
we propose to retain In this system
everything that is even claimed by
defenders to be legitimate. But we
propose to destroy what is admitted
oy It's defenders to- be immoral and
injurious to the trade and the public.
Inc United States is the only country
on earth that tolerates gambling in
hood products. AS a. war measure
we mad no gambling in wheat on the
BOARD OF trade until July Is, 1920, and
uhauestlonably the farmer, the dealer,
the miller and the consumer were all
peneflted by that order. 1t is claimed
lnat the law of supply and demand
hAes the price on the board Of trade,
Out WRen we see fluctuations daily
VI from to 15 cents a buShel for
wheat IN Chicago for a period of
ehres weeks In last Octobr, it will
lake something more than a mere
statement to convince me that the
inW OF supply and demand is operat-
ing IN such market as that.
Inc purpose Of the bill is to restore
Inc law of supply and demand, to
Iree operations. and to destroy cam
oins on the boards of trade and cot
ton exchanges of the nation. Grain
ana cotton are in peculiar situation
because of such a DEVELOPMENT of
exchanges over the world that they
completely dominate the world. mar
kets The price is made here, In the
grain and cotton pits. The exchanges
are privately conducted and are COM
pletely under control of rules made
Dy their own members. The mem
bership Is strictly limited. No man
may buy or sell on these boards who
IS not member. Through these
members, as principals and agents or
brokers' all who deal in these com
modlties are controlled and the price
IS controlled and fixed day by day,
and this price is instantly flashed
TO the remotest hamlet in the land.
II the trades made in the grain
anu cotton pits We're confined to the
legitimate grain and cotton indus
tries, there would be no criticism of
the exchange. And the justice Of this
position is recognized by the defend
ers OF the exchanges. They profess
mat their rules are consistent with
this idea. And the literal reading of
their rules bears out the claim. No
member OF the exchange under it's
rules may sell these commodities for
future delivery who does not intend
such delivery. On their face the rules
imply dealing in the commodity itself
and not in phantom wheat or imagi-
nary cotton. In actual operation, how
ever in the execution Of the rules.
phantom wheat and fictitious cotton
constitute not only a part of the op-
erations, but altogether the major
part.
1t can therefore readily occur, and
it has occurred recently that the price
has been determined not by the de-
mand and supply of the commodity
itself, but by the fabulous quantities
sold on the exchange that never had
any existence, that no cotton or grain
farmer in the world ever planted, ever
to:led over it's cultivation and harvest
or ever offered for sale. ATTEMPTS
are made to show that short selling
and other practices resorted to by the
board of trade made a better market
for the farmer but, after all has been
said in defense of it, the fact remains
that short selling is a speculation pure
and simple, and such sales are made
with the object of getting a profit
from declines in the market at the
expense of others The effect of such
short sales in both cases is to cause
and accelerate declines, and they bear
very heavily on the market that is
striving hard to hold up and advance
and which would often do so if if
were not for short selling.
Short sales aggregate in a year on
the grain exchanges in the United
States at least 20 times more than
the actual grain represented by the
crop of grain grown. Such sales do
not contemplate any real delivery of
the grain SO sold and in probably not
more than I per cent. of the cases
are deliveries ever made. The short
seller sells property, or what is sup
posed to represent property, that he
does not own, which has the effect
at least for the time being, of de-
Pressing the value Of the property of
another who does ovwn such nroperly
Now I claim no one has any moral
right to sell what he does not own
or possess, and, if laws were passed
and enforced prohibiting this, farmers
and the public would, L am sure, be
greatly benefited. l do not want to
be understood as being in favor of
prohibiting all sales OF futures Sell