FUTURES 329 



the question would arise immediately as to which of these parties 

 Day should pay his $200.co loss to, if it were not for the figuring price. 

 Day's clerk figures that having bought the corn of Smith at 47 cents 

 and sold it to Lee at 43 cents, he must settle on a basis of 45 cents 

 with each, which he does by paying Smith down to 45 cents, which 

 would be 2 cents a bushel ($100.00), and paying Lee up to 45 cents, 

 or 2 cents a bushel ($100.00). Thus Day has paid his loss direct to 

 the parties to the contracts with whom he had the trades. All the 

 other parties to the contracts pay and collect to this common price, 

 so that each pays his whole loss or collects his whole profit in a sys- 

 tematic and simple manner. 



Jones, who has bought of Brown at 46 cents and sold to Smith at 44 

 cents, pays each to 45 cents, i cent a bushel in both instances. Brown, 

 who has sold at 46 cents to Jones and bought at 48 cents of Lee, pays 

 Lee 3 cents a bushel ($150.00) and collects i cent ($50.00) of Jones. 

 So that each party settles with the parties with whom he originally 

 made the transactions, on the basis of an imaginary figure which is 

 every day fixed at about the average price for the day. 



The using of the "settlement" or "figuring" price has the effect of 

 enabling each party to the settlement to settle direct with the two 

 parties with whom he has made the transactions, on the same basis 

 that he would settle with them in case of a settlement wherein only 

 two parties were involved. It simply reduces the transactions to the 

 same basis as a trade wherein the purchaser had sold back to the 

 seller, at the "settlement" price and the seller has bought back of the 

 purchaser at the "settlement" price. In other words, it works out the 

 same as if Jones, who had bought it of Brown at 46 cents sold it back 

 to him at 45 cents and paid his loss of i cent a bushel ($50) to Brown, 

 and then having sold it to Smith at 44 cents bought it back of him 

 (Smith) at 46 cents, another loss to Jones of i cent a bushel ($50), 

 which he pays to Smith, and so through the whole list of persons in- 

 terested in the settlement as follows : 



Brown sold to Jones at 46 cents. . . „ , ^ r t 



Jones sold to Brown at 45 cents. . . B'-"^" -^oU^^ts i cent of Jones. 



Jones sold to Smith at 44 cents. . . ^ ^^^^ ^^ 



Smith sold to Jones at 45 cents -' 



Smith sold to Day at 47 cents ^^j,^^^^ ^ ^^^^^ ^^ ^ 



Day sold to Smith at 45 cents ■^ 



Day sold to Lee at 43 cents ^^^ ^^jj^^^^ ^ cents of Day. 



Lee sold to Day at 45 cents •' 



Lee sold to Brown at 48 cents Lee collects 3 cents of Brown. 



Brown sold to Lee at 45 cents 



