382 OC REPORT—1896. 
financing the bills of exchange drawn for the value of the shipment. This feature 
is specially emphasised as an insurance against loss in value in a declining market, 
it being pointed out that without such protection cotton importing would be a 
sheer gamble and speculation. 3rd. The sales of Futures by spinners, manufac- 
turers, and their agents against accumulated and accumulating stocks of yarn and 
eta = times when from temporary and local causes production is ahead of 
emand, 
The purchase of Cotton Futures as a hedge is divided into two sections: 1st. 
As purchases by shippers against contracts made for forward delivery, during such 
time as their agents, spread over the cotton belt, can lay their hands upon the 
actual specialties required. 2nd. As purchases by spinners against contracts made 
for forward delivery of yarn, by manufacturers against contracts made for forward 
delivery of cloth, and their agents, it being pointed out that after a sale is effected 
on a recognised basis a cover-purchase of practically equivalent value can be made 
immediately, the question of selection being a matter of detail and convenience, 
The fidelity of contracts is explained, also the rapidity and facility of effecting 
_ either sale or purchase, Cotton Futures being designated as the consols of produce. 
It is claimed that the system of dealing in Futures is the natural outcome of the 
expansion of trade, particularly the feature of the development of such by tele- 
graphy. The increase in the size of the crops, the small margin of present-day 
profits, the greater speed in transit, the increased magnitude of producing con- 
cerns, the necessarily greater increase in the capital for their requirements, are all 
demonstrated. Throughout the paper ignores theory or fallacy, and is devoted to 
a simple explanation of practice. 
4, The Influence of Business in Futwres on Trade and Agriculture. 
By J. SILVERBERG. 
Agitation against the system of dealing in produce for future delivery in 
America, England, and Germany. The opponents allege that — 
1. The system of selling fictitious produce is the cause of the decline and of 
constant low prices. 
2. That the system overrules the law of supply and demand. 
3. That statistical figures prove this contention. 
4, They stigmatise the magnitude of these transactions, which they brand as 
gambling. 
5. They produce evidence from their supporters. 
As against these it is argued that the system operates as part of the law of 
supply and demand. : 
The statistics are unreliable. 
The magnitude of the transactions in futures is immense. 
Futures may be classed as follows :— 
1. Speculation pure and simple is only a comparatively small part. Itis diffi- 
cult to trace ard to distinguish it from other business ; it is impossible to legislate 
against it and to stop it. 
2. Selling against imports, called ‘hedging,’ quite legitimate and supremely non- 
speculative. 
3. ‘ Jobbing’ transactions, balancing one another mostly on the same day, and 
not to be deprecated, having the advantage of creating a broad market. 
4. ‘Straddling’ transactions not altering the position, being identical with 
transposing quantities from one side of an arithmetical equation to the other, by 
changing the signs. 
Evidence given by opponents mostly biassed and contradictory ; they plead their, 
own cause, while pretending to pose as public benefactors. 
Dealers and importers of the old school are speculators, while the importer now- 
adays finds in the system the means of eliminating the element of speculation. The 
system moves the crops with ease and safety, draws them to our ports, and makes 
these the centres of distribution, which is a great benefit. 
