"PHANTOM GRAIN" QUESTION 351 



much like a piece of paper money; or the buyer may sell as much 

 as he has bought and settle by offsetting one trade against the 

 other, merely paying or receiving the balance due. 3 



Scalpers. As a matter of fact most speculative trades are 

 closed out before the delivery month comes around. There is a 

 small class of speculators who buy and sell in the pit during the 

 day on a very small fluctuation in price, but who aim to have all 

 their trades closed out by the time the market closes. They are 

 called "pit scalpers." 



" Phantom Grain " Question. The speculators and the scal- 

 pers produce a large volume of future trading, which some writers 

 call mere dealing in "wind" or in "phantom" grain; and this 

 "phantom grain," these same writers claim, depresses the price 

 of actual grain. When such a claim as this is examined it is seen 

 to be preposterous. For of all places, the organized exchange is the 

 one center where accurate market information is collected and 

 disseminated, and this information fully covers the visible supply 

 of grain, the arrivals on all big markets, the amount afloat and in 

 elevators, the conditions of growing crops, and every other known 

 factor of significance as to supply or demand. No speculator is 

 fooled by any "phantom" supply of grain, or he would be too 

 childish a person to survive long as a speculator. Again, since the 

 amount of "phantom" grain bought exactly equals the amount 

 sold, it may be looked on as a case of demand (tending to raise 

 price) just as much as it is a case of supply (tending to lower price). 



3 The use of delivery notices where one notice for 5,000 bushels, for in- 

 stance, may settle contracts for many thousands of bushels, is very much 

 similar to the use of money, checks, etc., in settling contracts to pay money. 

 The analogy is very striking. The following story illustrates how a piece of 

 paper "money" (i.e., credit money a promise to pay money) does the work 

 of real money (gold). 



" Mr. Brown, a Kansas gentleman, is the proprietor of a boarding-house. Around his 

 table at a recent dinner sat his wife, Mrs. Brown; the village milliner, Mrs. Andrews; Mr. 

 Black, the baker; Mr. Jordan, a carpenter; and Mr. Hadley, a flour, feed, and lumber 

 merchant. Mr Brown took a ten dollar bill from his pocket and handed it to Mrs. Brown, 

 with the remark that there was ten dollars towards the twenty he had promised her. Mrs. 

 Brown handed the bill to Mrs. Andrews, the milliner, saying, ' that pays for my new bonnet.' 

 Mrs. Andrews, in turn, passed it on to Mr. Jordan, remarking that it would pay for the 

 carpentry work he had done for her. Mr. Jordan handed it to Mr. Hadley, requesting his 

 receipted bill for flour, feed, and lumber. Mr. Hadley gave the bill back to Mr. Brown 

 saying, 'That pays ten dollars on my board.' Mr. Brown again passed it to Mrs. Brown, 

 remarking that he had now paid her the twenty dollars he had promised her. She, in turn, 

 paid it to Mr. Black to settle her bread and pastry account. Mr. Black handed it to Mr. 

 Hadley, asking credit for the amount on his flour bill, Mr. Hadley again returning it to 

 Mr. Brown, with the remark that it settled for his month's board; whereupon Brown put it 

 back into his pocket, observing that he had not supposed a greenback would go so far." 



The greenback may be presented to the United States Treasury and 

 exchanged for real money gold. 



The above story is quoted from "Among the Humorists and After-dinner 

 Speakers"; Collier & Son, New York, 1909, p. 251. 



