[2] See Appendix—Par. 2.
[3] See Appendix—Par. 8.
CHAPTER V
"THE HOUSE WITH THE CLOSED SHUTTERS"
Knock, knock, knock! Who's there, i' the name of Beelzebub? Here's a farmer . . .—Macbeth.
When wheat ceased to be grown for local needs and overflowed upon the markets of the world, becoming a factor in finance, arenas where its destiny was decided were established in the large centres of trade. In these basins of commerce the never-ending flow concentrated and wheeled for a short space before in re-directed currents it rolled on its way to ocean ports. Here, according to the novelists, frantic men were sucked into the golden eddies, their cries strangled and their fate forgotten even as they were engulfed by the Leviathan with which they adventured; or they emerged with eyes bloodshot, voices gone and clothes torn, successful speculators of a day. Perhaps the general reader is more familiar with these mad scenes of "The Pit," as the trading floor is called, than with the steadily turning marketing machinery of which they are but a penumbra.
The modern grain exchange is much more than a mere roulette wheel for the speculator. Its real purpose is to provide a centre for the legitimate trader. It is a great information bureau of world happenings where every item of news concerning the wheat in any way is gathered and classified—drouth, rain, frost, rust, locusts, hail, Hessian fly, monsoon or chinch bug. In every corner of the earth where the wheat streams take their rise, from green blade to brown head the progress of the crop is recorded and the prospects forecasted—on the steppes of Russia, the pampas of the Argentine, the valley of the San Joaquin, the prairies of Western Canada and the Dakotas, the fields of India, Iowa, Illinois and Kansas. Good news, bad news, the movements of ships, the prices on the corn exchanges of London and Liverpool, at Chicago, on the bourses of Paris, Antwerp and Amsterdam—all are listed. With such a Timepiece of International Exchange ticking out the doings of nations, both buyer and seller can know what prices will govern their dealings. In office or farmhouse an ear to a telephone is all that is necessary.
A grain exchange, then, is the market-place where grain dealers meet to secure information and maintain regulations for the prompt performance of contracts. The exchange organization does not deal in grain, but has for its sole purpose the protection of those who do and the facilitating of transactions; in other words, it is on the ground to see that the grain trade is carried on in an honest and capable manner and to punish offenders against proper business ethics and established rules.
Its membership is composed of grain dealers doing business in the exchange's territory—milling companies, exporting companies, line elevator companies as well as independent dealers and "commission men." Besides seeking a supply of wheat to keep their mills busy for the season, the milling companies sell wheat. It is the business of the exporters to make shipment to other countries. Wheat is sold to exporters and millers by the elevator companies, who are interested in running as much grain as possible through their elevators at country points. The chief business of independent dealers is to handle wheat that stands "on track," ready for shipment, either buying outright from the farmer or handling it for him on a commission basis.
The "commission man" is in an especially good position to do a clean-cut business. He assumes no burden of large capital investment and operating expense, as do the elevator companies. His chief need is a line of credit at a bank and from this he pays advances to his clients, his security being the bills of lading of wheat consigned to him. He does not need to buy or sell on his own account and, unlike the exporter, he does not have to risk changes in freight rates or in prices or make deliveries by given dates. As for the satisfactory milling quality of the crop—that is something for the miller to worry over. In order to do business it is necessary only for the commission man to be a member of the exchange and to obey its rules.