MEDIEVAL AND MODERN PRODUCE MARKETS 835 



II. TECHNIQUE OF MODERN MARKETING 



Organized speculation is based upon contracts for future de- 

 livery which make it possible to sell for specified prices goods 

 which are to be delivered in the future. These contracts may 

 assume a variety of forms. They may be divided in general into 

 "to arrive" contracts and term contracts; and term contracts may 

 be of two kinds, specific-grade contracts or basic-grade contracts. 

 The sale of goods in transit with agreement to deliver at the 

 stated price immediately upon arrival is a form of contract that 

 is naturally adapted to the conditions of trading in receiving ports 

 or consuming markets. This mode of doing business grew up in 

 connection with the maritime trade of London and Amsterdam. 

 Cargoes were sold while still at sea, and time of arrival was natu- 

 rally made the time of delivery. Such contracts are also applied 

 to goods in transit by rail, though the shorter interval of time 

 likely to elapse makes such a contract slightly less speculative 

 than the marine contracts. These contracts are usually made upon 

 the basis of samples sent in advance of the general cargo or upon 

 the understanding that the goods must be of fair average quality 

 (the so-called f. a. q. basis). Disputes as to quality would in such 

 cases be adjudicated by a committee of the trading association 

 and deductions from the price allowed if the stuff were below 

 grade. Such contracts can therefore be used without any system 

 of grading. The strict term contracts, however, require a formal 

 and systematic grading. The precise nature of the grades estab- 

 lished can vary within wide limits, but some system is presup- 

 posed by the character of the contract. The obligation of such 

 a contract is not to deliver a specific lot, but merely to deliver, 

 within specific time limits, a certain quantity of stuff so that there 

 must be some definition of the quality of the goods to be delivered. 

 Two modes of defining the qualities are open : the seller may be 

 required to deliver a specific grade of goods at the price stated, 

 with permission perhaps to deliver higher grades without com- 

 pensation ; or he may be allowed to deliver stuff of several grades 

 at prices to be computed by additions to the price of a basic 

 grade if the goods are above the base chosen and by subtraction 



