Our Present Price System 9 



July and August, however, corn values on the Chicago market oscil- 

 lated back and forth with rainfall and drouth, registering the 

 changes in niarvelously delicate fashion. Customarily, before the 

 war, it took an average rainfall, in the seven great corn states, of 

 about one and a quarter inches during ten days, to hold the price 

 of December corn futures practically stationary. A rainfall of 

 as much as one and three-quarters inches in a ten-day period dur- 

 ing July and August would ordinarily depress the price by several 

 cents a bushel, whereas a ten-day period with no rainfall at all 

 would customarily advance the price by eight or nine cents a bushel 

 or even more if the temperature was high. 



Anyone who studies these things is surprised at the accuracy 

 with which the market price before the war actually reflected crop 

 conditions as they changed from day to day. Since the war, it has 

 been more difficult to measure the price-making forces. Political 

 conditions in Europe even during the months of July and August 

 often have had as much influence as the weather in determining 

 the price of corn. 



The Board of Trade has to do with both cash grain and future 

 trading. So far as prices are concerned, the cash market is sup- 

 posed to be less sensitive than the market for futures. The busi- 

 ness of the future market is to register changing conditions as 

 promptly and accurately as possible. Occasionally, however, arti- 

 ficial situations develop. For instance, in a 3'ear of a very good 

 corn crop, a large number of speculators may have sold December 

 corn "short" at around $1.20 a bushel. At the time of the sale, 

 they may have had every reason to believe that they could eventu- 

 ally buy the actual grain for less than this price when the month 

 of December finally arrived. Then gradually transportation dif- 

 ficulties began to grow and bad weather came on, and altho tliere 

 might be an enormous crop in the country, there would be very 

 little corn in Chicago. Then certain other speculators might go 

 to work buying large quantities of December corn futures, knowing 

 that other men were "short" a long line of December corn at $1.20. 

 These speculators might not actually want the corn, but neverthe- 

 less, by playing the technique of the market, might be able to create 

 a "squeeze" and force the price of corn up to $1.50 a bushel before 

 permitting the "shorts" to settle. And this might happen in spite 

 of tlic fact that by January 2d there might be enough actual corn 

 coming'into Chicago to enable cash corn to be sold as low as $1.20. 



The object of this book is neither to praise nor condemn the 

 speculative system as a method for registering prices of farm 

 products. We are pointing out the strong points in the present 



