h need
concern the grain company and it is here they must look for expenses
and profits. This method of hedging enables a grain company to make
purchases in the country on much smaller margins than was possible in
the early days when the marketing machinery was less completely
organized. It eliminates to the greatest extent the necessity of
speculating to cover risks.

The speculator's opportunity comes in connection with the fluctuations
of the market in deliveries. He merely bets that prices will go up or
down, as the case may be. He is not dealing in actual wheat but in
margins. He buys to-day through his broker, who has a seat on the
Exchange, and deposits enough money to cover a fluctuation of say ten
cents per bushel. If October wheat to-day is quoted at $1.45 his
deposit will keep his purchase in good standing until the price has
dropped to $1.35. He must put up a further deposit then or lose the
amount he has risked already, the broker selling out his holding. If
the speculator is on the right side of the market--if he has guessed
that it will go up and it does go up--he can sell and pocket a profit
of so-many-cents per bushel, according to the number of points the
price has risen. If he has bet that the market will go down the
situation merely is reversed.

The machinery for handling the huge volume of business transactions in
a grain exchange must be complete and smooth running to the last
detail, so designed that every contingency which may arise will be
under control. For simplicity and efficiency in this connection the
Winnipeg Grain Exchange occupies a unique position among the great
exchanges of the American continent; in fact, it is a matter for wonder
that its methods have not been copied elsewhere.

The Winnipeg Grain and Produce Exchange Clearing Association is a
separate organization within the Exchange and to it belong all the
Exchange members who deal largely in futures. Each day the market
closes at 1.15 p.m. By two o'clock every firm trading on the floor
must hand in a report sheet, showing every deal made that day by the
firm--the quantity of wheat bought or sold, the firm with whom the
trade was made, the price, etc. If on totalling the day's transactions
it is found that they entail a loss, the firm must hand over a cheque
to the Clearing House to cover the loss; if a gain in price is totalled
the Clearing House will issue a cheque for it to the firm so gaining.
Thus, if Jones