488 



THE INDIA RUBBER WORLD 



[September 1. 1'<11. 



with the internal affairs of the corporation and its member- 

 ship. 



The Exchange itself is merely the organized machinery of a 

 great market place. Its main chartered purposes are: 



To maintain a suitable room for such market place. 



To inculcate just and equitable principles in trade. 



To establish and maintain uniformity in commercial usages. 



To acquire, preserve and disseminate valuable business in- 

 formation, and 



To adjust controversies and misunderstandings between per- 

 sons engaged in business — and this is all that it does. 



In discharging its functions, it appoints and licenses, on the 

 nomination of the various trades concerned, inspectors and 

 weighers; maintains a grain inspection bureau, a flour inspection 

 bureau and a chemical bureau for the official analysis of certain 

 food products. It provides machinery for the adoption of trade 

 rules and their enforcement. These trade rules apply to the non- 

 member as well as to the member, and the non-member as well 

 as the member has the privilege of using the machinery provided 

 by the Exchange to compel their enforcement. 



Through its rules for the handling of business, large econ- 

 omies of labor and expense are effected, and it virtually becomes 

 a great clearing houes of commerce. 



It has general agreements with warehousemen, with great 

 railroad lines, with various steamship and other maritime inter- 

 ests, covering the general needs of the trade at large, and in many 

 instances these agreements have resolved themselves into forms 

 of bills of lading, charter parties, etc., and are used generally in 

 the commerce of the port. Agreements with the railroad com- 

 panies also provide for the grading of grain at the railroad ter 

 minals in such manner as to effect large economies in labor, ex- 

 pense and terminal space. In the matter of grain, even the 

 charges for receiving, weighing, discharging, towing, lightering, 

 blowing, screening or dusting, etc., are subject to general agree- 

 ments entered into by the Exchange and the various interests 

 concerned therein. 



It takes a large interest in all matters pertaining to the develop- 

 ment of the commerce of the port of New York, and is con- 

 stantly striving to bring about improvements in the various trades 

 in the manner and method of handling their business; and it 

 co-operates with the public authorities in everj' public work look- 

 ing to the improvement of conditions in this port, as, for in- 

 stance, matters such as the new barge canal, adequate dock 

 facilities, etc. 



It may be of further interest to note a fact that all merchants 

 are well aware of — that an open market in which there is large 

 trading tends to minimize fluctuations in value. A narrow mar- 

 ket means violent fluctuations, but a great, broad market, cap- 

 able of absorbing all business thrown into it, reduces fluctua- 

 tions in values to a minimum. 



Of course, in the same degree that the Exchange makes trading 

 easy and safe for the merchant, it makes trading easy and safe 

 for the man of a speculative turn of mind who wishes to act on 

 his judgment as to values in precisely the same way that the 

 title guarantee and trust companies, in combination with great 

 estates and other financial interests, making it easy and safe for 

 a poor man to buy a home or for anybody to buy real estate, 

 make it, in the same degree, easy and safe for the man of a specu- 

 lative turn of mind to buy and hold real estate for an advance 

 in value. In this connection it should be remembered that, 

 though by the perfection of its machinery for the handling of 

 business transactions, it enables men to make speculative pur- 

 chases and sales, it also, by the same perfection of machinery, 

 enables merchants to remove entirely the element of speculation 

 from their business. 



Such, in brief, is the New York Produce Exchange, and such 

 are s6rtie of its functions. The institution itself is in excellent 

 condition. It'has a property large enough to act as a permanent 



endowment, insuring its easy maintenance. Its membership is 

 united in thought and purpose. Its gratuity problems have beea 

 practically solved, and the only problems confronting the new 

 officials are those of administration, and to these problems we 

 propose to give our best thought, care and attention. 



Edward R. Carhart, 

 President Xew York Produce Exchange. 



OPINIONS OF THE TRADE. 



FHOM A MEMBER OF THE PRODUCE EXCHANGE. 

 To THE EniTOR OF THE I.N'DIA RUBBER WORLD. 



S-ir: — Referring to your recent editorial regarding the listing 

 of crude rubber, would say that I am comparatively new to the 

 rubber business, most of my business experience having been in 

 other lines. One of the first things that struck me, however, 

 after getting interested in rubber, was that a manufacturer or 

 dealer really has no way of hedging his purchases or sales. There 

 is hardly another commodity traded in of the volume and value 

 of rubber, without an open oflftcial trading market. 



There is a market in London, but America, with all its vast 

 rubber interests, has none, and it seems to me that we ought 

 to have an open official market here and not be dependent on the 

 speculative Englishman. America probably now is and surely 

 will be the largest consumer of rubber and ought to lead rather 

 than follow. 



If a cotton manufacturer wants to book a big future order, say 

 for next December, he can buy this cotton future in the open 

 market and fix his cost of raw material at once and does not have 

 to tie up all his capital either — really does not have to pay a cent, 

 until his future purchase is due and delivered, just when he 

 wants it. 



A cotton oil refiner buys his crude oil based on the market of 

 the future month, which will give him time to refine and de- 

 liver the refined oil against his future sale and the price he pays 

 for the crude oil is the future price of month sold, less refining 

 costs, freight and his manufacturing profit, thus eliminating all 

 speculation from his business. If before delivery is due, the 

 manufacturer can market his oil in domestic or export trade to- 

 better advantage than delivering against future sales, he simply 

 sells the refined oil and buys back his future contract in the of- 

 ficial trading market. 



I know oil refiners that are never either long or short of 

 oil — keep everything always hedged, both in buying and selling 

 and thus assure at all times their manufacturing profit, and I 

 may say right here that the more conservative a manufacturer 

 is, the more he will make use of an open market when he can 

 always buy or sell any trading future to hedge the purchases and 

 sales of his factory. If he wants to speculate, he can and will 

 do so as an individual and not involve his manufacturing busi- 

 ness in a speculation. 



It is the same way with provisions and grain. If a packer 

 or shipper gets an export order, for say December shipment, he 

 buys a December future, bases his selling price on the cost of 

 the future — -no money involved except market differences until 

 time for shipment and whether the market advances or declines- 

 is really a matter of indifference to the shipper. 



Whether or not as entirely satisfactory, a trading market can 

 be developed in rubber, is for the future to decide. There may 

 be some difficulties in determining grades and standards, units 

 of trading, commissions, etc., but I see nc insurmountable ones. 



Then some will say an open market will tend to speculation, 

 but so far as the manufacturer and dealer is concerned, it will 

 have exactly the opposite effect ; it will eliminate speculation if 

 they take advantage of it. Nearly all business is more or less 

 speculative — of necessity must be so. An open market certainly 

 lends itself to speculation, but if one must speculate, and most 

 people do at tirties, by all means trade in an open, active market. 



