CORPORATE FACTORS IN PROGRESS 387 



thus lend themselves to gigantic schemes of stock jobbing, 

 which, if carried out as planned, might have wrecked Wall 

 street and half of the New York banks at the same time. 



American produce exchanges are more speculative than 

 even Wall street, and they are no less necessary to the business 

 of the country. It would be easy to mention a number of 

 very important functions they have to perform, and on the 

 other hand equally easy to draw up a long catalogue of abuses 

 which may be charged against them. Briefly put, their raison 

 d'etre, like that of the stock market, is to distribute the risks 

 inseparable from modern industry and commerce. For ex- 

 ample, when pioneer settlers are pushing into a new country 

 they have to contend with many special difficulties and stand 

 in need of special facilities from banks, railroads, and other 

 local institutions. Few of them will have barns to store their 

 crops in. As a rule they have to take them immediately they 

 are harvested to the nearest railroad station. Here there is 

 probably an elevator belonging to the railroad company and 

 run on its behalf. The company, through its local grain 

 agent, buys the wheat or corn and pays for it. Possibly it 

 cannot be sent east at once, and in order to minimize the risk 

 of holding it for weeks or months it is sold for future delivery. 

 Formerly that was a very usual practice in the northwest, but 

 it is no longer indispensable. 



As a second example, there is the owner of a huge flour 

 mill turning out several thousand barrels a day. In order 

 to ensure a constant supply of wheat for his mill he must make 

 heavy purchases in advance. If he were to enter at the open- 

 ing of the season into unprotected contracts for all the wheat 

 he expected to need, the risk would be tremendous for both 

 buyer and seller. They have to face the danger of market 

 movements so violent as to be ruinous. Both, therefore, 

 welcome a means of hedging. The miller can at any board of 

 trade or produce exchange in his neighborhood sell " futures." 

 He can protect himself against a violent slump in wheat or 

 corn by a prospective sale for September, October, Decem- 

 ber, January, or February delivery— any month in the grain 

 year, in fact. The seller on his side can protect himself against 



