upon other sources of information arriving through the mails. Formerly the line elevators in particular, with head offices at terminal markets, may perhaps have maintained wider margins by reason of this situation. The private wires keep the independent and farmers' elevators as well informed as are the local representatives of the line elevators. A wire-house man finds in the difference in respect to wire networks between the Minneapolis and the Chicago territory the reason for the continued importance of lines in the Northwest and for alleged larger handling margins there, and for agrarian discontent and political agitation. In getting the quotations to the country points the private wires perform a direct service to country grain dealers and to the farmers.

RELIABILITY OF WIRE NEWS.-In the matter of quotations, the information sent out by private wire concerns and ticker companies is about as reliable as it could be made. This is subject to careful regulation by the exchanges. The only chance for any manipulation and unfairness would be in the direction of favoring some subscriber or some company with earlier news than that obtainable through other sources. Doubtless every effort is made to prevent this sort of thing. In the matter of news and gossip on the other hand, the service of the private wires is susceptible of much improvement.

The description of the private-wire systems-which are the principle news distributors-and of their place in the grain trade is the subject of a separate chapter following. The so-called censorship of news is discussed in the next section.

Section 7.—Censorship of matter circulated by members.

WHY A "CENSORSHIP."-The word " censorship" is not entirely appropriate to the method and degree of control actually exercised by exchanges over the dissemination of news by their members, but it is actually used in the trade, and also appropriately expresses some of the needs of the situation. It is hardly necessary to add that the need appears almost entirely in connection with the interests of members in speculation or at least in future trading. It is further to be noted that the censorship relates mainly to the dissemination of news and gossip by private wires. The development of private wire systems, as a means of news distribution, in the last 25 years is one reason why the need of such control has been felt only comparatively lately, though doubtless another reason is the evolution of a keener public conscience on the subject of manipulated speculation, which is reflected in the attitude of the governing bodies of exchanges.

POWER OF THE BOARD OF DIRECTORS.-The powers of boards of directors of exchanges to discipline members for unmercantile conduct, or for acts detrimental to the exchange, carries with it control over

the character of the news and gossip dispensed by members through the mails or by private wire, and also over the character of their advertising. At Chicago-where the matter is of most importance-the censorship finds authorization in the rules as relating to conduct "involving the good name and dignity of the association.”1

The censor is naturally the secretary of the exchange, whether acting in the particular instance on his own initiative or for a committee (especially the Market Reports Committee) of the board of directors.

THE CENSORSHIP LARGELY A WAR-TIME DEVELOPMENT.-It appears that most measures taken to control news distribution date from the beginning of the war in Europe, which has afforded so frequent occasion for the invention and spreading of disturbing rumors. At Chicago it is possible to refer the awakening of interest in the subject of a censorship to criticism of the speculative grain trade at Washington during the first Congress of President Wilson's administration. The closer watching of the exchanges by the Food Administration after the United States entered the war has occasioned somewhat greater sensitiveness and some regulative action. But systematic provision for such care of news and gossip distribution as, for example, is exercised in regard to the recording and distributing of quotations, appears, as yet, not to have occurred to the officers of the exchanges.

NO PRELIMINARY EXAMINATION OF MATTER SENT OUT.-The exercise of a censorship in the complete and correct sense of the word implies review of matter to be published, or otherwise disseminated, prior to its release. In this sense there is no real censorship of grainexchange news. The extent to which preliminary examination can be carried out with regard to wire news and gossip, without destroying its usefulness, is negligible; hence, control in this connection is a question of presenting rules for members to observe and disciplining them for the careless handling or manipulation of news. Any other method would involve destruction of promptness in news transmission and, perhaps, the abandonment of the distinctive wire service altogether. Circular letters and pamphlets are required to be filed with the secretary of the Chicago Board, but it does not appear to be necessary that time be allowed for their examination before circulation, though such procedure should, in this case, be practicable. The file of such material is not preserved. Such a file would doubt

1 The first portion of Rule IV, sec. 18, reads as follows: "It shall be the duty of the board of directors in case any grave offense or act of dishonesty committed by any member involving the good name or dignity of the association, or any act of dishonesty on the part of a member shall come to their knowledge either by complaint or public report to cause a preliminary or informal investigation to be made by a committee of their number into the truth or falsity of such complaint or report, etc." A member found guilty shall be suspended or expelled.

less be voluminous, even though, in the nature of the case, not including wire house gossip. Its absence, however, means the absence of a foundation upon which definite policies of methods of censorship could be gradually built up.

Circular "market letters" are used by the cash-grain interests as well as by future-trading interests, but in their former use they appear to have required little attention, except with reference to insuring the accuracy and the fair competitive character of statements regarding values, for example, whether made with due reference to the quality and condition of the specific car lots. In other words, all the supervision that appears to be required in this connection relates to cash-grain quotations. To prevent such abuses, the Minneapolis Chamber of Commerce adopted, on December 12, 1916, a resolution requiring that a copy of all circular and market letters sent out on or after December 20, 1916, be forwarded to the secretary. This was done when, or shortly after, similar action was taken by the Chicago Board. Kansas City, apparently, has no specific regulation, though its directors are attentive to the same needs. SENSITIVENESS AS REGARDS CHOICE OF WORDS.-The officers of the exchanges show sensitiveness as regards words and phraseology used in circular letters and advertising matter. The words "speculative" and "speculation" should not occur too often. Preference for the word "futures" rather than "options" is commendable from the viewpoint of English diction, and is not merely a matter of "giving a bad dog a new name." At the same time, the reader might well consider in what sort of uses it is that words are worn out quickly. In general, it is felt by the officers of the exchanges to be important to emphasize "the serious business intent of the majority of contracts entered into," or, to state the proposition more fully, quoting the 1916 secretary of the Chicago Board:

The exchange must be upheld as a place where property is bought and sold with a serious business intent, instead of a place where people can buy and sell with no thought of ownership and [can] trade in market differences.

However, the "purchase of a future for investment" is a phrase produced by this sort of thinking that should not be tolerated either as English or economics.

Another comparatively specific and properly regulatory idea emphasized is the inadvisability of using any term that is adapted to or suggestive of bucket-shop transactions. Under this head a reference to the market as "an excellent trading affair" or a suggestion in favor of "a trading position" is condemned. The reference to outside criticism in this connection is explicit. The too familiar use of the cant of speculative trading is condemned; for example, talk of "accepting profits on upturns," references to "bear

sentiment," etc. The suggestion is made that only such terms be used as connote intent to "invest in commodities" with reference to inherent values attaching to ownership, and to refer on the selling side to "commitments to deliver." There is again occasion for comment. There is no such thing as investment in a future, although when a warehouse receipt has been paid for such full payment may perhaps be properly called an investment in a commodity.

ADVERTISING TO PROMOTE JOB-LOT AND SPECULATIVE TRADING CONDEMNED.-Advertising, naturally, is scrutinized by competitors and by the officials of the Board with reference to its conformity to the principles above stated or implied. Thus, the suggestion in so many words of speculation is frowned upon. The suggestion by way of advertising matter of transactions in small quantities or job lots is specifically condemned on one occasion on the ground that it "induces incompetents to undertake a hazardous enterprise." As a secretary of one of the exchanges puts it:

It is flaunting ourselves flagrantly in the face of the public to openly advertize in opposition to the conclusions of the public, which involves inimical legislation.

The conclusions of the public above referred to are adverse to such small trading by incompetents. Openly advertising for job lots is, therefore, consistently condemned.

In a general way, stating conditions as they are and as they are known to exist, and stating personal conclusions based thereon, is about as far as propriety warrants in either public advertisments or in sending open letters.

Aggressive business getting with obvious reference to earnings from commissions on futures is objected to. This policy is the result of outside criticism and legislative attacks upon the future trading side of exchange activities, and is expressly attributed to this motive. The situation is sometimes referred to by members of the Chicago Board as if there were a specific rule againt soliciting business in futures, but there appears to be no such specific rule or regulation. The following advertisement by a Kansas City member, “Invest in wheat, crop prospects poor, wheat bought on margin should bring big profits," brought forth sharp admonishment from his board of directors.

ATTEMPTS TO INFLUENCE PRICES.-Attempts to influence the course of the market by means of news naturally fall under the most explicit condemnation. On February 9, 1915, the board of directors of the Chicago Board of Trade adopted a report under which the secretary was required to

Notify all members of the exchange that in disseminating news other than that of a statistical nature, that would tend to influence the market, they must be sure of their information and the reliability of its source, and must be prepared to supply the secretary, for the use of the committee, with the source of such information.

On June 2, 1915, the board of directors of the Minneapolis Chamber of Commerce adopted the following resolution:

That it is the opinion of the board of directors of the Chamber of Commerce that every exchange hold its members, and particularly those operating private wire offices, to strict account for the news that they disseminate, and that the circulation of idle rumors or pretended information tending to influence the course of markets, without any effort to ascertain their reliability, should subject the offender to severe discipline.

These resolutions refer to "reports of a nature calculated to disturb, if not influence, values," apparently in the sense of designed to exert an influence different from that attributable to facts and conditions. However, admonition rather than specific punishment appears to have been the only result of disregard of the principles so stated.1

CIRCULATION OF FALSE NEWS AND ADVICE.-The interpretation of such resolutions with regard to what is meant by a design to influence the market reduces itself largely to a question of truth or falsity. If falsity is detected, furthermore, it may not inhere in the wire house that puts out the message, if the source and general character of the misinformation is indicated. With reference to the necessary checking of sources," reports and rumors should not be given publicity in a manner which makes it impossible to confirm their truth.”

One firm was on occasion exhorted not to give unverified rumors the standing they acquire by being put out over its wires. To pass on exaggerations is obviously not fair. If statements can not immediately be checked, they should be put out in a form to afford the possibility of checking. False or exaggerated statements often relate to sales for export, and to alleged purchases in Argentine, or shipments from there. On one occasion a member was sharply rebuked for reporting wheat fields "badly damaged" by a kind of frost that does not injure wheat. Of late, of course, military and political events have frequently been the basis of startling rumors. It does not appear that the "trade" has adopted the view that sensational reports are not good on their face, and that their use unverified and unqualified is a species of dishonesty.

At least one case has transpired in which a member was strongly recommending the bear side of the market to those who would read his circular letters, when, as it appeared later, he was himself buying

1 A resolution of the Winnipeg Board of Trade, adopted somewhat later than those above referred to, is interesting for comparison, because of its more specific nature. This resolution reads as follows:

"That the secretary be and is hereby instructed to notify all members of the exchange that in disseminating news that would tend to influence the market, other than that of a statistical nature, they must be sure of their information and of the reliability of its source and be prepared at all times to supply the secretary, for the use of the council, with their authority for the same; and further that any violation of the above shall be considered uncommercial conduct subjecting the members to the penalty according to the by-laws of the exchange."