146 WHEAT PRODUCTION IN NEW ZEALAND 



(6) Speculative Transactions. Technical terms used 

 in the above will be explained as we proceed. These are 

 the conditions necessary for the operation of future 

 dealing, and a "future" may be defined, as "a contract 

 for the future delivery of some commodity, without 

 reference to specific lots, made under the rules of some 

 commercial body, by which the conditions as to the unit 

 of amount, the quality, and the time of delivery are 

 stereotyped, and only the determination of the total 

 amount and the price is left open to the contracting 

 parties."* Another important class of transactions are 

 "cash" or "spot" contracts which are merely the out- 

 right sale and purchase of goods for immediate delivery. 

 These dealings may be purely speculative, as when a 

 person makes cash purchases to settle future contracts 

 previously made. Although they do not necessarily 

 imply a cash payment, they do represent actual 

 goods available in the market at the moment. A third 

 important class of contracts are "privileges." By a 

 "privilege" a person acquires the right to buy from or 

 sell to another person a certain amount of a commodity 

 at a price agreed on. But there is no obligation, and 

 the person has the privilege or option of completing the 

 contract. Privileges are either "puts" or "calls." The 

 former is a contract made with a view to a fall in price, 

 and the latter the reverse. In the case of the "put" by 

 paying a fixed sum, a person acquires the right to deliver 

 to a second person, the receiver of the fixed sum, or 

 "put money," a certain quantity of a commodity at 

 a price agreed upon on a certain date. If the price has 

 fallen by that time the seller will then purchase the 

 goods and make the delivery according to contract. If, 

 however, price has risen he will relinquish the "put" 



'Emery, ' ' Speculation. ' ' Page 46. 



