322 CORN 



Oushels of May corn, settlement would be impossible, except by Jones 

 procuring the actual corn and delivering it to Brown in the month of 

 May. In other words, both parties to the contracts must first have 

 a purchase and a sale of May corn, and secondly, must consent to a 

 settlement before any contracts can be closed, except by delivery. 



But there is a third and more essential condition which must exist 

 before the first two are of consequence, and they are not sought or 

 considered until it is discovered that this third condition exists. It 

 is the all important reason for settlement without delivery and is the 

 mere fact that delivery would be idle and unnecessary. Therefore 

 only such contracts for future delivery are settled without delivery of 

 the actual grain, as the parties to the contracts may agree to settle 

 after having discovered that delivery would be an idle form. 



When Delivery is Unnecessary. When a purchase and sale (there 

 must be both a buyer and seller) for future delivery is made on the 

 Chicago Board of Trade, it must be made with the intention on. the 

 part of the purchaser to receive and on the part of the seller to deliver 

 the commodity. Subsequent events may render delivery unnecessary 

 and settlement before the maturity of the contract desirable without 

 jeopardizing the legality of the contract. But this cannot be foreseen 

 and the buyer and seller must calculate to be prepared to receive and 

 deliver the cash commodity at maturity of the contract. 



Brown, having bought in January 5,000 bushels of May corn of 

 Jones, as previously stated, enters the transaction on his books, and 

 in the usual course of business Jones would deliver him the actual 

 corn some time in the month of May. But a week later Brown re- 

 ceived an order to sell 5,000 bushels of May corn, and stepping into 

 the corn pit offers the grain for sale, and Jones buys it from him. 

 Now, we have Brown and Jones in the position of having bought of 

 and sold each other 5,000 bushels of May corn. Brown, who origin- 

 ally bought of Jones, has now sold to Jones, and Jones, who originally 

 sold to Brown, has now bought of Brown. Suppose it were illegal to 

 settle future contracts, except hy the delivery of the actual grain, 

 where would Brown and Jones be? Which one would make the in- 

 itial delivery of the grain? Each would say to the other when May 

 arrived, "Deliver me that 5,000 bushels of corn I have bought of you, 

 so that I can deliver it back to you and thus settle your sale to and 

 purchase from me and my sale to and purchaS'" from you," and each 

 would answer the other, "When you deliver me the corn you have sold 

 me, I will deliver it to you." Could a more absurd condition exist in 



