THE PRODUCE EXCHANGES 1. Importance of the exchanges and of their spec ulative activity.—In one respect the commodity ex changes, or as we shall hereafter call them, the pro duce exchanges are more important than the mar kets where securities are traded in. Wheat, corn, oats, flour, lard and other similar foodstuffs are more essential to human life than the corporations whose shares form the basis of stock exchange speculation. The produce exchanges have fully as close, if not more intimate, relations with foreign affairs than the stock markets; their use of statistics, information, re ports and rumors of every variety is fully as exten sive; and the whole question of the benefits and evils of speculation is, if anything more insistent in the "pits" of the produce markets than on the floors of the se curity exchanges.
In the first chapter of this Text it was explained why the marketing of securities and agricultural pro duce had been developed by organized exchanges. We have seen how large a part speculation plays in the volume of exchange business, and the subject will be further discussed in later chapters. Obviously speculation can hardly be conducted on a gigantic scale except in competitive industries, because monop oly means control of the supply. There can be no monopoly, of course, in agricultural products of the staple variety, except for brief periods of time. Then, too, these staples are produced in such variable quan tities that fluctuations in the price naturally follow those in the supply.
Speculation is difficult where the demand for goods is small or fixed, but the demand for wheat, corn, cot ton and the like is both extensive and elastic. Thus speculation is fully as active in grain and cotton as it is in stocks. An idea of how extensive are the op portunities for speculation in wheat may be gathered from the fact that it sold as high at $2 in September 1888, and as low as 50 cents in September, 1894. In 1914, wheat sold as low as cents, and as high as $1.31. In 1915, the price varied from 98 cents to
$1.68.
2. Types of produce exchanges.—Organized pro duce exchanges have existed in this country since about 1850. They are variously known as exchanges, boards of trade, and chambers of commerce. In Eu rope, where they are sometimes called bourses, the Liv erpool Corn Trade Association and the Liverpool Cot ton Exchange are of prime importance, altho there are big wheat markets in Paris, Berlin and Budapest. Other markets are the London Corn Exchange, the Manchester Cotton Exchange, and the bourses of Hamburg, Amsterdam and Antwerp. The Argen tine Exchange also forms a large market. Besides the all-important Chicago Board of Trade and the New York Cotton Exchange, the prominent produce markets in this country are the following: New Or leans Cotton Exchange, New York Coffee Exchange (where sugar "futures," also, are dealt in), Minneap olis Chamber of Commerce, which as a wheat market ranks second to Chicago, Winnipeg Grain Exchange, St. Louis Merchants' Exchange, Duluth Board of Trade, Kansas City Board of Trade, Omaha Grain Exchange, Milwaukee Chamber of Commerce, To ledo Produce Exchange, Buffalo Commercial Ex change, Baltimore Chamber of Commerce, Phila delphia Commercial Exchange and New York Pro duce Exchange.
The New York and New Orleans Cotton Ex changes are the leading examples of markets where only one staple is traded in, altho the exchanges of Duluth, Minneapolis and Kansas City confine their operations almost wholly to grain. On the Chicago Board of Trade a variety of products are quoted, in cluding wheat, corn, oats, live stock, lard, ribs and pork. The same is true of the New York Produce Exchange. The great media of general speculation, however, are wheat and cotton, with corn a poor third, altho the production of corn exceeds that of wheat. "Wheat is subject to more speculation than the other grains because its production and consumption are more international in character. Corn is largely con sumed where it grows.