means a store of things locked up somewhere before hiring and production begin; or if anybody has regarded the intention to save as differing essentially from other human intentions and not liable to be changed by change of circumstances; or if anybody has ever supposed that the fund for paying wages is anything else than a portion of the commodities that are continually emerging from production; or if the fact that, as a body of wealth, all capital is by turns wages fund, has been sometimes lost sight of; or if it has been assumed anywhere that changes in the efficiency of labor do not react on the fund for paying wages,—if any of these defects, or any other defects, are to be found in existing expositions of the theory, let us by all means endeavor to get rid of them. But it would be poor policy to throw away wheat, in order to be rid of chaff. While thus unable to accept the main propositions for which Mr. Walker has contended, I cannot close without avowing my grateful recognition of the important service he has rendered in relation to this difficult portion of economic theory. If he has established no new doctrine, he has certainly done much towards improving the old. Future writers on these subjects, whatever their opinions may be, cannot safely overlook what he has written. If the treatment of wages shall henceforward dwell less on the mere formula and more on the industrial conditions, less on the arithmetical process and more on the quality of the living men back of the arithmetic, we shall be largely indebted for the improvement to Mr. Walker. This, if not the precise end he has had in view, is at least so far akin to it that he may well regard such an issue of his labors with entire satisfaction.

S. M. MACVANE.

"FUTURES" IN THE WHEAT MARKET.

TRADING in contracts for the future delivery of wheat has grown to large proportions in the United States of late years. And, when attempts were made during the past summer to corner the wheat market at Chicago and at San Francisco, the enormous amount of capital so employed, and the predominance of speculative activity at those cities, naturally drew unusual attention to what has been described as gambling in our chief food staple. Leading newspapers throughout the country roundly denounced the speculators for the derangement of trade and the abnormal prices resulting from attempted corners, and, as so often in the past, called in question the legality as well as the morals of what is known as "the future contract."

In June, the New York Tribune concluded a discussion of the effects of speculation, by saying that "in time a wiser public opinion will prevail here, holding speculation in food products hostile to public welfare and the gambler in grain an enemy of the American producer." Even more direct were the allegations of the Buffalo Commercial Advertiser in August, when it declared that "certain little speculative games, much in vogue in American commercial centres, . . . have made the exchanges of our large cities huge gambling clubs," and added that "among those demoralizing customs is the practice of dealing in 'futures,' 'options,' buying and selling on margins without transfer of merchandise." These are but samples of the language used by leading daily newspapers throughout the country during the past summer. In the United Kingdom, similar comment is not wanting. The St. James Gazette, of London, asks, "At what point does legitimate trading suddenly become transformed into mad

speculation, involving the public in the greatest inconvenience and entailing loss or ruin upon thousands of innocent people?" The Mark Lane Express, whose antipathy to dealings in futures is well known, volunteers the information that "these contracts (futures) are framed to allow of differences in value at a certain date or within a certain time being paid or received, the commodity itself never being intended to pass from the one party to the other. The seller does not possess it. The buyer does not intend to receive it."

The indictment contained in these extracts, if it can be sustained, is certainly broad enough. It not only comes from hundreds of writers for the newspapers, but crystallizes the belief of thousands of intelligent people,―merchants, farmers, manufacturers, and legislators. Such an outery should not be ignored. When public opinion, as mirrored by the press, strongly condemns the methods of those who collect and distribute our harvests at home and abroad, it is time that an examination should be made as to the facts.

The future contract is the agreement, often erroneously called an "option," by which the seller binds himself to deliver a certain quantity of wheat at a specified price at a date named. The form for these contracts, in use at the New York Produce Exchange, is as follows:

GRAIN CONTRACT. ("FUTURE.")

In consideration of One Dollar in hand paid, the receipt of which is hereby acknowledged, have this day sold to (or bought

This contract is made in view of, and in all respects subject to, the By-laws and Rules established by the New York Produce Exchange.

If the contract be for 8,000 bushels of No. 2 red winter wheat, September delivery, the "option" consists in its resting with the buyer or the seller (whichever the contract specifies) to say on what day in that month the delivery shall be made.

Let us suppose that a general storekeeper or a local grain buyer has received at Parsons, Kansas, in odd lots, or has been through the country and bought, some 16,000 bushels of wheat, and has had it delivered at the elevator alongside the railway. The farmers in Labette and surrounding counties in Kansas presumably take the Parsons Sun, and, in addition to keeping themselves informed as to the price of wheat at Chicago and New York daily, are familiar with the market price of wheat at Parsons. The latter depends primarily on quotations at St. Louis, and indirectly on those from New York, winter wheat markets; for winter wheat is raised in Kansas. The Parsons price is nominally the St. Louis price less the cost of transportation thither. The local shipper believes, that his 16,000 bushels will grade No. 2, New York inspection, and has paid, on an average, about 54 cents per bushel for it. We will further suppose the cost of shipment to New York to be 25 cents per bushel. It is August. The late "iniquitous speculation and attempted corner at Chicago have killed trading in wheat," and the price at New York has fallen to 80 cents, with the market likely to drag for some time; but telegraphic report reveals a more active market at New York, with an advance of 13 cents. Thereupon, this speculative wheat buyer wires a New York grain commission house to sell for his account, September delivery, 16,000 bushels of wheat, and proceeds to load his grain into cars and send it to New York to meet his contract. The New York merchant goes upon the floor of the Produce Exchange, and sells (by contract), for September delivery, 16,000 bushels of wheat, which particular grain is at that mo

ment in a little elevator out in Kansas. The purchaser of this wheat represents an English house, which imports wheat to sell to millers in the United Kingdom. The Parsons merchant sold when he did on a "bulge," believing that the general outlook for the next six weeks favored a low and dull market, and wishing to get the benefit of the temporary advance. The exporter bought when he did on a direct order from the firm abroad. But, within two hours or twenty-four hours, the exporter, finding ocean freights tending downward, seeing also a prospective decline in prices, and believing that he will be able to make better arrangements for export at a later day and still meet the wants of his principals, sells 16,000 bushels of wheat this particular 16,000 being in mind-to a New York miller, who, for reasons of his own, wants it. A day later,— or, perhaps, on the same day, the miller, finding a fractional advance in prices and aiming at a subsequent purchase to supply his mill, in turn sells 16,000 bushels of wheat for September delivery. It is purchased by a member of the Produce Exchange, because he "thinks it cheap" or for "purely speculative reasons," who disposes of it, either at a small loss or profit, to another "scalper," and so on, until sales have been made perhaps twenty times.

This brings us to a consideration of the means by which future contracts are closed out in actual practice. All future contracts (New York and Chicago) contemplate the actual delivery of the grain, and they may be closed out only in one of three ways:

First. By the actual delivery of the grain, which may be by elevator or warehouse receipts or by the moving of the grain alongside, if from commission merchant to exporter. Under this head, too, comes the system of delivery on what are termed "transferable orders." The contracts on the New York Produce Exchange read, we will say, "sellers' option," which refers to the day on