Chicago Board of Trade, to 1884, the futures quoted were wheat, corn, oats, mess pork, and lard. Rye, barley, and short ribs sides were added to the list in 1885. Flax also was added in 1890. Barley quotations ceased in 1895. Flax quotations do not appear after 1904. Rye ceased to be quoted in October, 1910. From May, 1917, to December, 1918, there were, of course, various interruptions and restrictions upon trading due to the war, which need not be described in this connection. In August, 1918, trading in rye futures was revived, and in September trading in barley futures. Various restrictions upon trading imposed by the United States Food Administration were removed in December, 1918, though reimposed in large part in May, 1919, but wheat futures were not restored, pending the meeting by the Government of its obligations in connection with the marketing of the 1919 wheat crop.

THE CONTINUOUS MARKET AND THE CALL MARKET.-A futures market can not serve its purpose to the best advantage unless it be continuous; that is, unless there are present in the pit throughout the hours of trading a considerable number of members ready to buy and sell at the slightest change in the market and to act upon each news item that may bring about a readjustment of values. It is obvious therefore that a small futures market can not serve its purposes efficiently. Even if there is sufficient trading to be continuous," the volume may be so small that a large hedging order, of 100,000 bushels, for example, can not be placed to advantage because traders can not be found who will take so much except at a large concession. It is said that at Chicago a single trader has, on occasion, been known to sell as large a total as 5,000,000 bushels in successive offers without forcing the market down more than an eighth of a cent.

Where there is not sufficient interest in futures to maintain a continuous market, some trading may be done on the call basis. This amounts to holding an auction at an appointed place and time for various lots of grain, cash as well as futures. The call is largely used as a method of determining quotations, more or less fictitious in their nature. The serviceability of call futures for hedging and similar uses is limited. There has been no call trading in futures in connection with the Chicago Board for many years. Future transactions as reported for the smaller markets often refer in part to, or are even constituted by, call trades.

EXTENT OF BUSINESS INTEREST IN FUTURES ON 15 GRAIN EXCHANGES.The comparative degree of interest in future trading on the various exchanges mentioned above-and upon others not there mentioned because not dealing in futures-is indicated by the classification of members with reference to whether they are primarily occupied with future trading or not. The following list includes all the

important, and even the rather unimportant, cash-grain markets in the United States. When an exchange without any future trading of its own shows some members occupied mainly with futures the trades are, of course, executed on some other exchange, mainly Chicago.

TABLE 2.-Number and proportion of resident members of various exchanges engaged primarily in future trading.

1 For further details see Vol. II of this report. Philadelphia statistics unobtainable.
2 Firms.

3 95 members of over 1,600 unclassified.

· Chicago, with 64 per cent of its resident membership occupied primarily with futures, stands in a class by itself. Its unquestioned predominance in this respect is borne out by statistics of the volume of futures traded in, as appears in the next section.

Section 4.-Volume of future trading and the course of its development.

TAX DATA FOR THE CHICAGO BOARD OF TRADE.-Prior to the going into effect on December 1, 1917, of the present Federal tax on futures, no record was kept of quantities traded in on the most important speculative grain exchange-the Chicago Board of Trade. The Commission, consequently, was compelled to compile necessary data of this nature, with the assistance of the members of the Chicago Board of Trade Clearing House. But for determining the aggregate volume of trading within the five-year period (1912-13 to 191617) which has received particular attention, there is available another statistical source, which is more directly serviceable in its limited way than the detailed data assembled by the Commission, especially since the latter show gaps where records have been destroyed, and, in fact, are made comprehensive only with the aid of the tax data here referred to.

Revenues collected from the members of the Chicago Board of Trade for the period when the 1914 tax on futures was in effect amounted to $3,130,636. Some of the stamps sold may have been used for other purposes than to pay the tax on futures, but in comparatively small amount. Some were used for provision trades.

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The tax also applied to offers as well as futures, but in case an offer or call" resulted in a sale of the future no further tax was levied on the future. On the other hand, a large part (about onethird) of the amount collected was obtained by compromise, after the tax was supposed to have been paid, with reference to a wrong interpretation by the members of the Board as to the taxability of a certain class of trades known as "transfers." Owing to this misunderstanding and compromise, it may be inferred that the total collection was somewhat less than in full proportion to the total taxable transactions. Altogether, $3,000,000 may fairly be considered to represent the amount of tax due on grain future trades on the Chicago Board of Trade from December 1, 1914, to September 8, 1916. The tax was 1 cent for each $100 of value. The value of the futures represented by $3,000,000 in taxes would be $30,000,000,000, and at 92 cents per bushel1 the quantity involved is 32,609,000,000 bushels. The period of the tax was 214 months, hence, the average trading per month was 1,534,500,000 bushels, or an average per year of 18,414,000,000 bushels.

ITEMS CLEARED AT CHICAGO, 1910-1918.-While there is no available record of the volume of futures traded in at Chicago for a series of years, the method of charging for clearing involves the making of a record of the number of items cleared. This record affords some sort of an index of the variation in the activity of the futures market, or of the volume of future trading from year to year. Its use assumes that the average size of trades or of settlements changes only inappreciably from year to year. If importance is attached to the exact date of the trades, it is also necessary to assume that the average life of open trades remains about the same from year to year, since settlements will be slower where trades are held open for a greater length of time. But in any case this means merely a slight displacement of the volume of trading as between years. It will be noted that the index relates to the quantity of trading and is unaffected by the values or the level of prices at which trades are made. The figures in question, together with certain derivative and supplementary figures, are as follows:

1 The average Chicago price of the grain futures affected during the period when the 1914 tax was in effect was as follows: Wheat, 119 cents; corn, 72; oats, 46 cents per bushel. Weights are assigned to the grains according to their estimated shares in the total trading-wheat, 53; corn, 27; oats, 20. These weights are the proportion of trading in the three futures indicated by the tabulation of Chicago future-trading returns applicable to the period in question. The weighted average price per bushel for all the grain futures is thus 92 cents.

TABLE 3.—Number of items cleared and indicated volume of future trading on the Chicago Board of Trade, 1910-1918.

See following table.

1 Clearances qualified with reference to the average price level. 2 Except as regards 1915, based upon the relation of the mean of the two indices to the estimated volume for 1915.

3 Based upon tax data, as explained in the text. The apportionment of the figure for the 211-month period of the tax assumes that the trading per month in 1916 was almost 50 per cent greater in volume during the final 33 months than during the first 8 months of the year. This is in accordance with the ratio indicated by Chicago future-trading returns.

The items cleared include provision futures throughout the period. The quantity is at present small (perhaps not over 5 and certainly not over 10 per cent) and may have shown a gradual decrease for some years, thus affecting somewhat the value of the index as referring to grain futures. Barley and rye futures are included since the fall of 1918, but in inappreciable amount.

CLEARANCES AT CHICAGO AND INDICES OF FUTURE TRADING, 18841918.-It is desirable to carry the Chicago index further back than data for items cleared are available. Figures of clearances in lieu of money payments in the settlement of future trades can be had from the annual reports of the Chicago Board of Trade for each year since 1883. While the use of these directly for the purpose in hand is open to criticism, the major objections can be overcome by taking into consideration price differences between the parts of the 35-year period and by other means. The following table presents the fundamental data and the derivative figures for each year since 1884.

TABLE 4.-Clearances through the Chicago Board of Trade Clearing House, by years, 1884-1918, inclusive, together with an index of future prices and derived index numbers of the volume of future trading.1

The price index is based upon calendar-year prices derived from monthly averages of daily quotations for the next maturing future for each grain, the three series being combined by assigning weights as follows: For wheat, 53; for corn, 27; and for oats, 20. (See footnote on p. 34.)

The future trading index is obtained by dividing the price index into the crude clearance index. The theory is that the quantity represented by a given clearance figure varies inversely as the price, and that the differences in prices represented in settlements will be relative to the price level rather than an absolute number of cents irrespective of prices. For example, a difference to be settled of 3 cents per bushel on wheat in 1917 is no more than equivalent to a 1 cent per bushel difference in the nineties. Fluctuations in prices will in general vary with absolute price levels, both as between oats at 35 and wheat at 90 cents and as between wheat at 90 cents and wheat at $2.50. Of course, this is a rough-and-ready method of dealing with the clearance figures, but, at least in the long run, it tends to bring the index of volume into closer approximation to the truth.