CREDIT TRANSACTIONS IN SECURITIES 179
ment of money. Smith owns a fertile farm, where in the past
he has grown wheat both successfully and profitably. But
early one spring he finds himself without money enough to buy
seed and pay for plowing, sowing, and harvesting the next
year’s crop. It seems a hopeless situation to Smith, as he
murmurs to himself those ancient and tragic words, “If I only
had the money. . . .” But the affair is not so impossible
after all. The fundamental earning power in his dark rich
s0il is undoubtedly there. And so, perhaps just when Smith is
most discouraged, a commission grain merchant who has heard
of his dilemma, visits him and offers to buy the crop that Smith
is so confident he can raise, before it is even planted.
If this is the first time that Smith ever made such an
arrangement, he may perhaps think the whole transaction fan-
tastic and impracticable. Yet the modern machinery for han-
dling such credit operations has rendered them a universally
beneficial commonplace in American agriculture. With the
money advanced by the merchant, Smith proceeds to purchase
seed and do his plowing, sowing, and harvesting. Of course,
the transaction has its risks. Smith has sold a wheat crop
which as yet he does not possess. \Vinds, rains, and insects
may prevent him from making the deferred delivery of wheat
in return for the money advanced him by its purchaser. Never-
theless, without this sale for future delivery Smith would not
have been able to raise a crop at all. In the ma jority of cases
both Smith and the commission merchant will find their bar-
gain a profitable one. Other similar examples both of purchases
or sales made on credit could, of course, be cited almost
indefinitely.
Use of Credit in Security Transactions.—Buying and
selling securities on credit is no different in principle from buy-
ing or selling houses or wheat on credit; neither does one have
to go to the Stock Exchange to meet with such transactions.
In floating the Liberty Loans our Government employed the
buying and selling of securities on credit to a vast extent. In
