This situation, however, is not to be ascribed to any action taken, or lack of action taken, by the Minneapolis Chamber of Commerce, or any other exchange. It was the natural product of conditions beyond their control, of which uncertainty as to what would happen on August 20 respecting government price controls was at the immediate moment the most important. Effect on the Prestige and Welfare of the Association The difference between what happened in Minneapolis and in Chicago lies essentially in the difference in attitude shown respecting the maintenance of the integrity of contracts and the personal responsibilities of traders thereunder. In Chicago, the Board of Trade assumed responsibility, on May 12, at the request and recommendation of Government agencies, to fix prices and thereby determine profits and losses. This applied both to actions taken in May and in the final premature closing out of specified contracts in June. By these actions neither the integrity of contracts, nor the responsibilities of contracting parties were preserved. The prestige of the Chicago market suffered heavily and the exchange laid itself open to legal attack by aggrieved parties. By contrast, the Minneapolis Chamber of Commerce deliberately chose to maintain the validity of its contracts so far as possible and to insist that its traders, both speculators and hedgers, cooperate and participate in mutual settlements whereby the interests of both parties would be safeguarded so far as equitably possible under the circumstances over which neither the traders nor the Chamber of Commerce had control. Officers and directors of the Minneapolis Chamber of Commerce stated it to be their belief that the actions taken to protect the validity of contracts, preserve the responsibilities of traders and avoid the responsibility for determining profits and losses throughout the difficult period from May through July 1946, were economically and legally sound in principle, and conducive to the prestige and welfare of their Association. APPENDIX GRAIN IN DELIVERABLE POSITION IN FEDERALLY LICENSED WARE- Stocks of grain in deliverable position in federally licensed warehouses in Chicago at the end of each week are compiled by the United States Department of Agriculture. Since about seven-eights of all grain elevator space regular for futures delivery in Chicago is federally licensed, the quantity of grain in deliverable position in federally licensed warehouses gives a fair indication of how much grain is immediately available for delivery on futures contracts at the end of each week. The quantities of wheat, corn, oats, rye, and barley of deliverable and nondeliverable grades in deliverable position in federally licensed warehouses in Chicago at the end of each week during the first six months of each of the four years 1943 through 1946 constitute the subject matter of Appendix Tables 1 to 5 and correspondingly numbered Appendix Charts. For wheat, the statistics available subdivide the total quantities in store to show deliverable grades, nondeliverable grades, and ungraded grain, while for corn, oats, rye, and barley, the segregation covers only deliverable and nondeliverable grades. Wheat Appendix Chart 1 and Table 1 present comparisons of quantities of deliverable grades of wheat in deliverable position in federally licensed warehouses in Chicago on corresponding week ends of the first six months of each year, 1943 through 1946. APPENDIX TABLE I (SOURCE: Deliverable Grades (Bushels) WHEAT IN DELIVERABLE POSITION IN FEDERAL WAREHOUSES IN CHICAGO FIRST 6 MONTHS 1946, 1945, 1944 and 1943: FOOD DISTRIBUTION ADMINISTRATION, COMPLIANCE DIVISION, CHICAGO, ILLINOIS) Nondeliverable Grades (Bushels) Ungraded (Bushels Total in Federal Warehouses (Bushels) Week 1946 1945 1944 1943 1946 1945 1944 1943 1946 1945 1944 1943 1946 1945 1944 1943 99,509 351,292 2,332,118 1,941,054 196,392 1,242,239 88,325 428,339 3,934, 723 2,214,627 344,289 1,704,644 | 15,065 126,846 1,833,879 1,203,671 142,124 841,745 169,404 899,962 1,129,489 500,769 386,363 440,552 348,208 933,383 2,519,346 4,275,237 3,692,324 302,298 1,886,593 780,824 -- 235,016 353,478 318,046 158,370 851,784 4,231,972 2,994,829 The striking showing of Chart I is that stocks of deliverable grades of wheat in Chicago in federally licensed warehouses, (most of which may be assumed to have been in deliverable position since most federally licensed warehouses are also regular for futures delivery) was very small throughout the first five months of both 1945 and 1946 as compared with the quantities of such grades in store in such warehouses in 1943 and 1944. Only in June 1945 was there a showing of increased quantity in store, while June 1946 brought no increase in the total of such grades in store. Furthermore, as shown in Table 1, there were only relatively small quantities of either nondeliverable grades or ungraded wheat in such warehouses out of which deliverable grades might have been made by mixing and transfer to regular store in May and June of 1946. Wheat of deliverable grades in such warehouses normally constitutes the principal source of wheat available for the satisfaction of futures contracts not liquidated by the normal method of trading. From the showing it is obvious that the quantity available for the satisfaction of futures was dangerously low both in 1945 and 1946. For instance, on March 30, 1946, three days after 9,492,000 bushels of May wheat contracts were prematurely closed out by order of the Chicago Board of Trade, there were only 140,281 bushels of deliverable grades in store in these warehouses. This was the largest quantity of deliverable wheat in store at any time during the first half of 1946. It represented only a little more than 1 percent of the total of May contracts outstanding. And to make matters worse, this wheat could not be held in store for possible satisfaction of May futures for the reason that it was subject to Government disposition under the terms of War Food Order No. 144. Thus, while the total in store was not greatly lower than that shown for 1944, the supply for delivery on futures was, in fact, much tighter than it had been one year before. Corn Appendix Chart 2 and Table 2 make similar comparisons of quantities of deliverable grades of corn in store in federally licensed warehouses during the first half of each of the years 1943 to 1946 inclusive. |