Assume that the original trades stood on the books without any offsetting transactions until "delivery day," the last day of the month named in the contracts. Then at that date, under the rules, the buyer must be in a position to take the 5,000, 10,000 or 50,000 bushels named in the contract and pay for them. He then has to deal with cash property and he has turned over to him warehouse certificates calling for the actual property for which he must draw his check in settlement. The original seller, on the other hand, may tender the amount of grain named on "delivery day" or he can deliver the same at fixed hours on any trading day of the month named in the contract.

The member or house which for his own account or on orders from a principal continues to buy certain cereal for some future month on a large scale for weeks or months in advance becomes a factor in the market to the extent perhaps of causing a marked upturn in the price. Those who have thus bought are termed in the principal "longs" or holders in that particular cereal on that exchange. Those who have sold to this large buyer or to others, day after day are termed "shorts." These latter may find the market going too much against them and through fear of heavy losses may switch suddenly to the buying side for protection. This is called "covering," a performance which often adds great force to the buying side and results in a sharp advance in the price for the time being. On such a swell in the price the large holders may reduce their lines at good profits or may continue to buy up to delivery day when they can demand the actual property. This condition may be reversed. The holder may find the market each day going against him. The sellers may grow bold, pressing the market lower until the longs are forced to abandon their position. If they sell out to prevent further losses it is called forced liquidation - just the opposite of covering by shorts. The short sellers, with a decided advantage in the market because of the decline, may buy back to offset previous sales or may continue short until delivery day when they are obliged under the rules to produce the property sold - having the entire month to make the delivery. This kind of trading gives rise to all the turns in prices in a speculative market. When carried to extremes it gives rise to violent fluctuations in prices by which smaller or more conservative traders are greatly inconvenienced and often financially injured.

Following up the foregoing methods of trading a "corner" develops under certain conditions. A strong house or a group of leaders in the trade may decide that the wheat, corn or oats market is in a condition to be easily controlled and the price manipulated. The shipping demand for a certain cereal has reduced stocks. The country roads are bad or farmers too busy to market grain freely. Perhaps some injury threatens the growing crop and makes the country unwilling to part with reserves. If the warehouses contain but 2,000,000 bushels of the grade required to fill contracts and the man who contemplates running a corner sees that another 2,000,000 bushels is all the country tributary to the market is likely to furnish, even with the inducement of high prices, then his plan is to keep on buying until he has accumulated a line of about 10,000,000 bushels. Of this amount the sellers of 4,000,000 bushels will have the actual grain from the country and from the elevators to deliver when

Corner the month for which it is sold arrives. The sellers of the other 6,000,000 bushels are caught "short." They have sold what they can by no means deliver. If these shorts take alarm and rush into the open market to buy or "cover" for protection then the excitement begins. Prices may be advanced several cents in a single day. After prices are thus carried far above a natural level others of the short sellers may seek to make private settlements on large lines outside of the regular trading channels. There is a third and last resort for those who sell and can not deliver. They can default on their contracts and ask an arbitration committee to fix a fair settlement price. It should be stated here that the laws of many states make the running of such a corner illegal. On nearly all exchanges, also, there is legislation against such operations. As a rule the man conducting a deal of this kind is fortunate to escape losses in the end as he has delivered to him such a volume of high priced grain that he may not be able to distribute and market it until the expense of storing, insuring and carrying the grain will offset the profits he may have secured in his settlement with the short sellers.

One of the most important features of the exchange, underlying both the cash grain trade and the transactions in futures is the matter of grain inspection. After the grain leaves the farm and is thrown upon the open market at an exchange point it becomes an element in the commerce of the world. Banks make loans on grain in transit and in store. It must carry insurance in most of its travels from producer to consumer. Somebody must vouch for it. The man who goes around the world needs personal words of introduction and letters of credit. Grain - the chief product of American farms - must start on its way in the world of trade with a certificate to show its quality. Grain inspection is conducted not by the exchange but by the state in which the exchange is located. Thus, Missouri regulates inspection for St. Louis, Minnesota for Minneapolis and Illinois

Grain Inspection for Chicago. The governor of the state appoints a Chief Grain Inspector. This same official aided by a board of Railroad and Warehouse Commissioners appoints a Supervising Inspector and as many assistants as the size of the railroad center and the volume of grain handled suggest. These assistants visit the railroad yards daily and by extracting samples from the interior of the cars of grain fix upon its proper grade. These grades usually range from No. 1 to No. 4 and below this it is classed as no grade or rejected. It is with the higher grade the greatest care is needed. Most exchanges specify that contracts may be filled with No. 1 or No. 2 grain. If the state does its work well other exchanges and grain merchants the world over learn to accept its certificate of inspection without question. The state not only inspects grain as it is received, and before the samples are offered on the exchange, but it places inspectors at warehouses to certify to quality of cargoes withdrawn from store for shipment by boat or rail to their destination. Millions of bushels of grain are sold every month in the year to European buyers who rely on the grade given the grain at the American exchange point by the state inspectors.

At times when sellers are making heroic efforts to rush grain to market to fill large contracts it is often of the greatest importance to have the receipts grade No. 2 instead of No. 3. The one certificate will make it deliverable on a contract made on the exchange, the other will not. Growing out of this emergency, in attempting to make grain good on contracts, there has grown up at each exchange point a system of private elevators equipped with machinery for cleaning and drying grain to raise its grade. It is then passed to a public elevator, is again inspected and may be delivered on contracts. What is known as "kiln dried" corn is very desirable in commercial circles at certain months in the year -especially the germinating season - when corn containing moisture cannot be shipped long distances without heating or sprouting.