WHEAT IN WESTEEN CANADA 115 



contracted for ; and yet he is neither a loser in the one case 

 nor a gainer in the other, for the differences involved have 

 been already settled v^ith the Clearing House during the 

 time the contract was open. 



The Clearing House system permits of the same vrheat 

 being bought and sold a number of times within a season 

 and a single warehouse receipt, say for 5,000 bushels of 

 wheat, may have an adventurous career in passing through 

 a long series of brokers' offices. In a single year, indeed, 

 the amount of wheat bought and sold on the Exchange may 

 be several times the amount of the entire available crop.^^ 

 Yet, in the end, the final purchasers all obtain the wheat 

 they have contracted to buy, at the proper moment and 

 without fail. The system of the Clearing House, owing to 

 the security which it affords, allows of transactions being 

 made closer to the margin of necessary profit than would 

 otherwise be possible, with the result that farmers obtain a 

 higher price for their grain than they could if no such 

 system were in operation. 



The Clearing House makes it its business to know the 



financial standing of its members and any failure of a 



member to live up to his contracts is visited with instant 



punishment. If a member should appear to be plunging 



49 From this no inference can be drawn that the transactions in 

 futures are necessarily imduly speculative or gambling in their na- 

 ture. Thus a miller who has bought more October wheat in April 

 than he finds in August he is likely to be able to grind in view of 

 orders received since the date of purchase, may sell in August the 

 excess for delivery in October to some one else. In September, how- 

 ever, he may find that, after all, owing to the receipt in that month 

 of unexpectedly large orders for flour, he may require, in order to 

 meet these orders, even more October wheat than he has sold. He 

 therefore once more goes into the market and again purchases Oc- 

 tober wheat. Thus a part of the original purchase of October wheat 

 in April and of his sale of the same in August simply become book 

 entries which go to swell the entries in the Clearing House records 

 and to increase the total volume of buying and selling but which do 

 not afi'ect the amount of the actual grain involved. 



