64 THE ECONOMIST'S OPINION OF MARKET WRECKING. 



"This is the season wlien farmers begin to grnnilile ii,a::iinst Boards of Trade, and 

 assert that sliort-sellers are engaged in their usual efl'ort to nialce a low market for farm 

 products. There is some ground for their irritation. It is po?sible that the system nf 

 trading in futures, now so popular, has been carried to an abuse. * * » * It is within 

 the range of possibility that the Exchanges may be brought to see that after all a change 

 in the system of trading may not operate to their disadvantage. It may be found possible 

 to trade in grain (and cotton) on a cash basis, as stoclis are traded in on the New York 

 Exchange. No pretense is made that the volume of speculation is curtailed to any im- 

 portant extent in stoclo, by reason of the fact that all transactions are strictly for cash 

 * * * * The seller of stocks may not have the stocks to deliver at the time he makes 

 the trade, but he must, in some manner, procure them. * * * * If he does not al- 

 ready own them, he does this by borrowing the stocks and paying therefor a small per- 

 centage, which percentage is regulated by the urgency of the demand from short-sellers. 

 Why could not this plan be put in force in regard to grain, (cotton, etc.)? Would not 

 such a system result in equalizing the carrying charges, which are u serious handicap upon 

 investors and icjyon the property itself? 



Under existing conditions grain and cotton is burthened with a taxfrotn the moment 

 the seed is put in the ground. This tax does not begin to accumulate, apparently, until 

 the grain has left the harvest field and is on the way to the great markets. But as a 

 matter of fact, the property is handicaped from its inception. 



Investors and producers have the burthen to carry, and the short-sellers have the 

 advantage to the extent of the full accumulation of charges of all sorts — transportation, 

 storage, insurance, commissions, etc. They (the short-sellers) figure that the pr&ptrty 

 cannot carry this burthen and advance to a point beyond it which will give the holders of 

 the ( real ) property a profit. 



They argue generally that grain ( and cotton ) will not be worth any more one, twO' 

 or six months hence than now, and that they have just the advantage over investors aud 

 producers which is represented by all these accumulated charges (as they invest nothing 

 in the sort of stuff in which they deal ) hence they feel a certain degree of safety in ofl'er- 

 ing property (promises ) for future delivery at prices which pays them a liberal premium, 

 thereby gaining all these carrying chargesjusf as surely us if they owned the elevators in 

 which the grain was stored, the railroads upon which it was carried and the insurance 

 companies and banks which collect additional tolls. 



If the short-seller.s were compelled to deliver the grain they sell and pay the owner 

 a per cent, for (he property to deliver on contracts the carrying charges would be fairly 

 equalized in the long run. 



Possibly, also, this process might result in filling the warehouses with grain, for 

 capital will find profitable employment in investments in huge quantities of grain as a 

 basis for such operations. (And this would, at such seasons as when more grain was be- 

 ing marketed than was required for immediate consumption, relieve the market of undue 

 pressure). 



"Excessive short-selling (all short-selling is excessive ) which is beyond any question 

 a burthen upon production, and a serious handicap upon investment of * * * capital 

 would be measurably reduced * * * and the onerous feature would be measurably 

 eliminated. ( If it is a wrong why not eliminate it wholly). 



"A little experience might relieve the speculative trade of the horror which it now 

 feels of contact with the actual grain. * * * * A system of cash dealings would cer- 

 tainly give the producer an even chance with the short-seller, which he does not now en- 

 joy-" 



"The strangulation of the Butterworth bill last winter merely postponed action; it. 

 did not kill the sentiment that was bacli of it, or remove the grievance." 



