306 
Gambling in Farm Produce. 
“ bulls” almost always got the worst of it. Since making that 
discovery he has been a persistent “ bear,” greatly to the profit 
of those with whom he was concerned, and to the advantage of 
his own business. He is convinced that the option system is not 
only the cause of ruin to a great number of people engaged in 
the speculative trade, and to others with whom they are con- 
nected in business, but also that it is in great measure account- 
able for the agricultural and commercial depression which has 
prevailed for so many years in this and other countries. He 
has, therefore, made it his business to denounce the system 
under which he was formerly engaged, and in the second 
book which he has written on the subject he has gone into 
great detail in exposing its methods and effects. 
Among the statements made in Mr. Smith’s second book (Com- 
mercial Gambling) are some which may be briefly given in sub- 
stance. He says that in a falling market, importers are protected 
by their sales of futures, taking daily or weekly cash differences 
as the market falls. This shows clearly how it is that importers 
who might be supposed to be on the side of the bulls, really 
become bears in respect of the options which they sell against 
their importations. Conversely, in a rising market, importers 
are often in difficulty if they are men who deal in options, as they 
have to buy back the futures they have sold, because they cannot 
realise quickly enough their actual stocks on the same parity 
of values as the rise in the market for futures. Therefore, to 
create cash to pay into the clearing-house, they must sell part of 
their actual stocks at the best price they can get, or buy back 
their futures, and then, when the market turns once more, the 
futures have to be sold again at the best price that can be got, 
and so on. An importer, it may be observed, can take his time 
to buy, as a rule ; but he is often a compulsory seller, unless he 
happens to be a man of great capital. Mr. Smith gives these 
examples as showing, not only that the option system tends to 
reduce prices, because it is the interest of almost all classes of 
men engaged in the business to run them down, but also because 
it causes panics which tend, in their turn, to reduce prices. The 
option system , he says, where it has become common, has driven 
the old class of merchants, men of large capital, out of business, 
and has admitted a number of mere men of straw. As an ex- 
ample of this, he states that a panic in the cotton trade was 
brought about by a couple of bank clerks who robbed their 
employers of 180,000^. to pay their differences in the clearing- 
house, the result being extensive failures, and the ruin of many 
men of business. In special seasons, Mr. Smith remarks, when 
speculation is rampant, extra carrying premiums, from 5 to 6 
