Although about ninety per cent. of the contracts made on any exchange are in "futures" there must always be the very important basis of cash business. Without the actual property the contracts for future delivery would mean nothing and would have no standing in law. The main features of cash trading will therefore be considered first. A good portion of the trading hall is generally given to what are termed cash grain sample tables. The grain house with a certain number of cars of wheat, corn, oats, rye, barley or flax seed on the railroad tracks for its disposal hastens to have samples of the same displayed on these tables. The samples are in small paper sacks, the contents of which have been taken from the cars when they were inspected on arrival. Each sack contains the name of the railroad line over which it was received, number of the car, the grade affixed by the official inspector, etc. When the samples are placed on the tables the grain is on the market. Around these sample tables gather the receivers who have grain to sell and buyers of all classes who wish to secure a share of the current receipts from the country. As suggested before, these buyers may include: First, elevator owners who want the grain to fill their houses for the profits in the storage; second, the millers or their agents buying wheat to grind; third, brewers and distillers who wish corn or barley for manufacturing purposes; fourth, the agent of the cereal company who wants oats for his plant; fifth, the shippers who have need of grain of all kinds to fill contracts made with eastern distributers, with actual conCash Grain Trading sumers or with export interests contracting for supplies needed abroad.

When the seller and buyer agree on a price for a single car of grain or for fifty cars, as the case may be, the sample bag passes to the buyer. He can then direct the railroad having the cars on its tracks how to dispose of them. They may be ordered to a certain warehouse or mill or other plant to be unloaded or they may be ordered switched to the tracks of some other road to be forwarded to the point for which the grain was purchased. These transactions repeated on each trading day of the year constitute the chief feature of the cash grain trade.

Another important feature in the cash grain business is the delivery of grain in either private or public warehouses. Sales may be effected from private houses by samples or from public warehouses by the tender of the official receipt or certificate representing the grain when it went into storage. Usually sales made from storage houses are for larger amounts - possibly only 25,000 bu., if some special lot of grain is desired - but more frequently 50,000, 100,000 or 250,000 bushels where the grain is to be moved out by rail or water in large quantities. In all these transactions the bill of lading, the certificate of the public weighmaster, and the official inspection certificate pass with the grain to the buyer who gives in exchange his check in full payment. This closes the cash grain transaction.

That part of the business of the Produce Exchange which receives most notice by the press and the public is known as "trading in futures" or speculation. Unreasonable critics of the system go so far as to call this feature of the business gambling. This phase of criticism was discussed in a previous chapter on the Stock Exchange, which furnishes a parallel case.

Each member of a Produce Exchange can do business on his own account or he may execute orders for others inside or outside the association. If he operates for others he does so on a

Property Passes to Buyer commission prescribed by the rules. He must in making a report of his trades to his principal state in certain written form with whom he made the trade in the open market, the time at which it was made and the price. If a member acting as a broker for a fellow member or as a commission merchant for an outsider makes ten or twenty or two hundred trades in a day the same exacting conditions attach to each separate transaction. It is the growth of such business that builds up, first the small commission firm and possibly, later, the great grain and banking house with private wires stretching out to other exchange points and penetrating into the states tributary to the home exchange.

The trader who sees in existing conditions on a certain day reasons for higher prices and operates with a view of advancing the market is called "a bull." The trader who does the opposite is called a "bear." The entire trading body as well as the public, so far as it takes any part in the making of the market, is thus divided into bulls and bears as on a stock or cotton exchange. If a man with money to invest or risk in a business transaction buys a vacant lot in a suburb and sells it a month or a year later at a certain advance or a certain loss he has engaged in what the trade and the public call speculation.

It is a simple matter to apply the same attempt at profit making to the products of the soil. The grain trader goes into the open market where he meets hundreds of others and makes trades - makes contracts for future delivery - under the fixed rules of the exchange - in grain. He buys in midwinter or early spring on May contracts or in the summer or fall on September or December contracts. While he is doing this another member has made a sale of a certain quantity of a specified kind of grain to be delivered in May, July, September or any other month. Long before the month named arrives, the man who had the grain "bought - finding himself with a profit of several cents, goes into the same open market and sells out a like amount. The member who sold originally finds the market several cents against him. He goes into the market and buys a like amount. The one draws down profits from the clearing house. The other puts his check into the clearing house to make good his losses. Both are even on the market. Both have engaged in speculation in its simplest form.