ew 
—— Ee ee 
TRANSACTIONS OF SECTION F. 881 
effect upon prices examined in the light of the law of supply and demand—Its 
influence in rising and falling markets respectively—It has accentuated the fall of 
prices of commodities within the last twenty years—Its development assisted by 
the telegraph and the telephone—Why it is confined to the markets for raw 
materials—lts indirect effect in the markets for manufactures—Its connection 
with speculative operations—How far these. can be differentiated from pure 
gambling—The system, properly organised and controlled, is, on the whole, 
economically beneticial—The demand for legislative suppression not justifiable. 
2. Grain Futures, their Effects and Tendencies. By H. R. RATHBONE. 
Futures trading, or ‘ options’ as they are generally called, has been of recent 
growth in the grain trade, and has only during the last ten years exercised a para- 
mount influence on the trade. Its introduction has increased the tendency already 
in operation to reduce the margin of profit iu distribution to a minimum. Owing 
to the tendency of speculators to overtrade the margin is generally against the 
importer, and, except under rather unusual cireumstances, the cost of distribution 
is borne chiefly by the speculators. In America, where the system has reached a 
perfection unknown elsewhere, the option-market is the invariable basis of trading 
both for the farmer, the distributor, and the miller. In fact, the option-market is 
looked upon by the trader as a sort of insurance system. The rapidity with which 
the trade can be executed in these speculative markets has invited operators from 
all parts of the world, and undoubtedly during the great fall in prices since 1891, 
the world used the American markets in which to insure their holdings. But itis 
quite impossible to prove that this fall in values was brought about by option- 
trading, although a natural fall is accentuated just as a rise is by the existence of 
the option-market. On the other hand, it may easily be shown that much of the 
shrinkage in values is due to a fall in freight both ocean and inland. 
It is evident that this speculative trading by reducing margins and by making 
large operations less risky and dangerous is steadily concentrating the grain trade 
of England into fewer and fewer hands. ‘There are unmistakeable signs that this 
concentration may eventually take the form of large trusts or syndicates for the 
distribution of our breadstufts. As long as England follows her Free Trade prin- 
ciples, it is unlikely that any such abuse of their powers will be possible as we are 
familiar with in protectionist America. And the hope of the Fabian, that such 
trusts are only the stepping-stones to the nationalisation of commerce, if not 
brought about by abuse, is still less likely to be brought about on the ground of 
economy. For, as long as mankind remains what it is, with an inherent, insatiable 
passion for speculation, I can imagine no cheaper means for distribution than that 
in which option-trading plays so important a part. 
3. Cotton Futures, what they are, and how they operate in Practice. 
By CuHarves STEWART. 
Avoiding trade technicalities where possible, and explaining them where 
unavoidable, the paper commences by a description of what a Cotton Futures con- 
tract is, its method of working as a contract in suspense and at maturity, and how 
differences in value are adjusted through the medium of the Clearizg House of 
the Liverpool Cotton Association. 
The subject is afterwards separated into two divisions: the utility of Cotton 
Futures as ‘ Hedges,’ first as sales, second as purchases. The sales are again 
divided: Ist. As sales by planters in order to secure a favourable current price 
while the crop is growing, the feature dwelt upon being that such a sale can 
always be immediately effected, and a ruling good or fair price instantaneously 
secured. 2nd. The sales of Futures by importers as a hedge against shipments, 
this operation fully protecting the value interest not only of the importer while 
the cotton is in transit or in the warehouse, but also the interest of the banker: 
