Hermann von Schullern zu Schrattenhofen: Results of the Austrian Futures-Trading Inquiry (1901)

Hermann von Schullern zu Schrattenhofen’s article critically synthesizes the Austrian inquiry of 1900 into exchange-based futures trading in agricultural products. Writing as both economist and participating expert, he organizes seven sections around the inquiry’s institutional setting, Austrian trading conditions, definitions, historical development, economic effects, prohibition, and reform. He represents competing testimony while arguing that futures trading, under contemporary conditions, intensifies downward pressure on grain prices. His preferred response is selective institutional reconstruction: preserve genuine delivery and useful hedging, but restrict speculative transactions and the exchange practices that disadvantage producers.

The opening credits the government with broad consultation, freedom of testimony, and access to substantial statistical materials, despite the inquiry’s limited publicity. Approximately eighty experts represented agriculture, commerce, milling, law, and economics. Schullern acknowledges possible agricultural underrepresentation and later admits that his selection privileges theoretical arguments. His account is therefore an expressly evaluative synthesis, not a declaration of unanimous findings. Vienna alone possessed agricultural futures trading in the technical sense; although its volume was relatively small, newspaper circulation gave its quotations disproportionate influence over provincial transactions. Dependence on Hungarian grain and the Budapest exchange further complicated Austrian intervention.

The first conceptual move is to distinguish futures trading from merely contracting for future delivery. Schullern locates its economic specificity in exchange usages that make both commodities and contracts interchangeable, and in published quotations that transmit their prices to other markets:

Der Terminhandel ist jenes Lieferungsgeschäft, das kraft seiner Natur und auf Grund der Usancen fungible Ware durch ein fungibles Geschäft wirksam macht für den allgemeinen Markt auf dem Umwege über die Preisnotierung.

English translation: Futures trading is that delivery transaction which, by virtue of its nature and on the basis of established trading usages, makes a fungible commodity, through a fungible transaction, effective for the general market by way of price quotation.

This characterization deliberately avoids a rigid legal definition that traders could evade through minor contractual alterations. It also supports his distinction between pure difference transactions, genuine delivery transactions, and hedging transactions in which delivery remains possible without being the principal purpose. Arguments about “futures trading” otherwise miss one another because different speakers judge different activities. Likewise, recognizing its emergence from modern transport and commerce does not establish its continuing legitimacy: historically natural institutions remain answerable to changing economic needs and moral demands.

Schullern makes the price question counterfactual rather than equating a downward tendency with continuously falling prices:

Ich halte die Fragestellung nur dann für richtig, wenn sie dahin geht, ob der Terminhandel die Tendenz habe, immer oder unter gewissen häufig zutreffenden Voraussetzungen die Preise des Getreides niedriger zu stellen, als sie wären, wenn ausschließlich Effektivhandel bestünde, also so wie ich die Frage weiter oben formuliert habe.

English translation: I consider the question correctly posed only when it asks whether futures trading tends, always or under certain frequently prevailing conditions, to set grain prices lower than they would be if only trade in actual commodities existed, thus as I formulated the question above.

Expanding supply regions and cheaper transport already depress prices; futures trading, he argues, amplifies these forces. Difference speculation detaches nominal supply and demand from actual stocks and requirements. Hedging permits imports that merchants might otherwise avoid, while repeated transactions increase selling pressure. A single loosely specified commodity standard facilitates substitution and delivery, weakening recognition of superior grain. Producers selling under financial compulsion cannot bargain on equal terms with merchants invoking the published futures price.

The article nevertheless distinguishes theoretical conviction from statistical demonstration. No unaffected comparison market is readily available, since quotations influence distant markets, and futures standards cannot simply be equated with physical grain qualities. Schullern also separates spatial price equalization from temporal stability: the former need not reduce fluctuations. He rejects claims of reliably predictive quotations because harvests, international movements, and local requirements remain uncertain. His criticism concerns the authority accorded to those signals as much as their accuracy.

The normative argument turns cheap grain from an isolated consumer benefit into a question about the whole economy. In predominantly agricultural Austria, impoverishing producers also weakens demand for manufactured goods and services. Schullern seeks prices that sustain production under suitable national conditions, rather than either maximum prices or compensation for exceptionally unsuitable cultivation. His organic conception of occupational interdependence contests the identification of commercial efficiency with national welfare.

That position leads him away from blanket prohibition. Genuine delivery contracts are unobjectionable, and bounded hedging can help secure necessary imports without complete dependence on Hungarian merchants. Reform instead should reduce excessive fungibility through several scientifically differentiated grain standards and shorter contractual and delivery periods. Weinzierl’s technical testimony is important here: hectolitre weight alone does not adequately establish milling and baking quality. Legal testimony, especially Górski’s, exposes the danger of treating exchange usages as authoritative rules despite unequal bargaining power.

Schullern’s most controversial proposal is repeal of the provision excluding the defence that an exchange transaction constitutes gambling. He accepts that this could unsettle contractual confidence but considers enforceable speculative winnings the deeper public harm. Alongside scrutiny of commission trading and taxation of transactions without actual delivery, he supports better quotation procedures, protection against coerced arbitration, independent legal supervision, appeals, and agricultural representation in exchange governance. The conclusion places these reforms within a broader agrarian programme:

Als die wirksamsten derselben betrachte ich die Einführung von Zwangsgenossenschaften der Landwirte und die Ausgestaltung des Lagerhauswesens auf nicht kapitalistisch-spekulativer Grundlage — ich meine also — unter der Aegide des Staates, der Länder und der Gemeinden.

English translation: I regard the most effective of these measures as the introduction of compulsory agricultural cooperatives and the development of warehousing on a non-capitalist-speculative basis—that is, under the aegis of the state, the provinces, and the municipalities.

The article’s enduring significance lies in connecting market design, information, contractual law, and unequal bargaining power. Futures reform is only one instrument of agricultural recovery; collective organization and publicly supported storage must also strengthen producers’ capacity to choose when and how they sell.