Congratulations to David Pinzur, PhD, whose article “Making the Grade: Infrastructural Semiotics and Derivative Market Outcomes on the Chicago Board of Trade and New Orleans Cotton Exchange, 1856-1909” will be published in Economy and Society. The article will be published online and in hard copy by the end of 2016. This article is part of Pinzur’s dissertation project, “Building Futures Markets: Infrastructure and Outcome on the Chicago Board of Trade and New Orleans Cotton Exchange.”
In this article, Pinzur uses two historical case studies to ask what forms derivative markets can take and how these forms impact price volatility. Comparing the creation of futures markets on the Chicago Board of Trade and New Orleans Cotton Exchange after the Civil War, he finds that the two exchanges–reflecting material,economic, and cultural distinctions–differed in how they graded the agricultural goods underlying their markets. While wheat in Chicago was graded by a single party as it entered into storage and then mixed with other shipments, cotton in New Orleans maintained its form and was graded in an antagonistic negotiation at the point of exchange. Pinzur demonstrates that these differences in classifying practice gave commodity grades distinct qualities: in New Orleans, grades were reliable, but expensive, guides to the quality of cotton, while in Chicago they were unreliable and cheap. These differences affected the types of trades found on each exchange, with Chicago traders embracing volatile, speculative trades, while those in New Orleans favored stable, hedging trades. The article thus demonstrates how distinct classifying practices, shaped by their social environments, contribute to vastly different levels of volatility on two important early derivative markets.