1.1.1. Creation of a Futures Market
Three technological developments in the 12-year period before the Civil War led to the creation of a futures market. The railroad revolutionized travel and extended the reach of commodities markets. The mechanized grain elevator facilitated the standardization of commodities products. The telegraph made communication with far-off markets instantaneous, allowing people to anticipate market prices worldwide.
The Chicago Board of Trade (CBOT), founded in 1848 as a kind of chamber of commerce, began the practice of standardizing certain grains in uniform grades, which quickly became the focal point of the grain trade. Soon speculators began to anticipate price movements. They would sell grain they didn’t own for future delivery and hope the price of grain would fall before the contract became due. If the buyer on the other side of the deal was also a speculator, the grain would not need to be delivered. T