THE MARKET WRECKER— A MENACE. 



The one menace to the prosperity of the American farmer is tlie practice of short- 

 selling (or option dealing) upon the "Boards of Trade." 



In order to so discuss option dealing, or the short selling of farm products, that the 

 reader may understand what is the writer's conception of the term, it will be best to illus- 

 trate by saying tliat ou September SOth: 



"A" contracts to sell and deliver and "B" to receive and pay for 10,000 bushels of 

 the speculative grade of wheat at $1.00 per bushel, delivered at seller's option in Decem- 

 ber. There are also forms of option dealing which boards of trade do not recognize as 

 reguUr, but wink at, such as "puts and calls," and a process obtains called "ringing out" 

 whereby a vast majority of deals are daily settled by a kind of clearing house operation 

 without any intention or semblance of delivery. 



Under the contract supposed "A" has the "option" of delivering the amount of 

 wheat named at such time during the month of December as he may elect, the term 

 "option" having reference solely to the time when, during the month named, the seller 

 maj' declare the contract matured, but not one contract in ten thousand is ever carried 

 into effect by the delivery of property, it being a matter of common notoriety that in 

 9,999 out of every 10,000 such transactions "A" neither owns nor expects to own the 

 grain he contracts to sell and deliver, nor does "B" expect to receive the wheat he has 

 entered into a contract to receive and pay for, the tacit understanding being that should 

 the price of wheat, at maturity of contract, have advanced to $1.05 per bushel, "A" shall, 

 instead of delivering to "B" 10,000 bushels, pay him the ditTerence between the then 

 market price and the contract price, which being 5 cents per bushel. "A" pays "B" 

 1500.00. On the other hand, should the price have declined 5 cents, "B" would settle the 

 deal by paying "A" $500.00. 



In all time cont»iicts entered into upon Boards of Trade (and this term is used to 

 designate all exchanges where such contracts are made), with very rareexceptions, neither 

 seller nor buyer own or expect to own a single pound of the commodities in which they 

 pretend to deal; nor do they contemplate the delivery or receipt of such commodities, but 

 each hopes the price will turn in his favor and enable him to win. Thus the transaction 

 bears the same relation to commerce as does a wager upon a horserace, the only difference 

 being that in one case a definite sum is at stake, while in the other the wager is an in- 

 definite one that the price of wheat in some future month will vary from a stated sum, 

 the amount of the wager being measured by such variation, and the winning party is 

 determined, not by supi)ly and demand, but by as incalculable a contingency as the pre- 

 ponderance of the "bull" or "bear" element when the contract matures. 



After the making of sucli a contract, "A" is short on December wheat and is des- 

 ignated as a "bear," and "B" is long on December wheat, and is classed as a "bull." 



As nine-tenths of the time more option dealers are interested in depressing than 

 in advancing prices, the weight and influence of the speculative body is almost continu- 

 ally exerted in depressing prices. First comes the constitutional bear, who, from long 

 habit of thought or a pessemistie mental tendency, has come to believe prices are always 

 too high; then the professional bear, who, knowing it is easier to depress than advance 

 prices, sells below the current price property he does not own, and whose winnings de- 

 pending upon lower prices, exerts all his ingenuity in exaggerating the extent of the 

 supply and fabrication of sueh reports of failures, panics, stringent money markets and 

 the great breadth of and favorable conditions surrounding the growing crops as will tend 

 to cause the "longs" to become pLinic stricken and throw their holdings on the market 

 and thus depress prices to a point that will enable him to win. Next comes the specu- 

 lator, who, being convinced prices are too low and must advance greatly, intends to profit 

 by the expected rise, but being "out of the mafket" and desiring to get in a« cheaply as 

 possible, becomes an active and unscrupulous bear, exerting himself to the utmost to de- 

 press prices that he may buy the more cheajily and increase his margin of winnings. 

 Thus the efforts of nearly all the devotees at this singular commercial shrine work for 



