The opinion
Mellott,
dissenting: The case of Ben Grote, 41 B. T. A. 247, which I feel was decided correctly, does not support the conclusion of the majority in the instant proceeding. It approves an administrative *1091 ruling (G. C. M. 17322, C. B. XV-2, p. 151) — which it may be is not bottomed upon any specific statutory provision — authorizing the deduction of losses in connection with “hedging” operations as “a legitimate form of business insurance.”
I agree with much that is said by Mr. Hill in his dissenting opinion. It is obvious that petitioner’s dealings in futures in refined oil did not constitute true “hedging” operations in its business. Hedging “is a means by which collectors and exporters of grain or other products, and manufacturers who make contracts in advance for the sale of their goods, secure themselves against the fluctuations of the market by counter contracts for the purchase or sale, as the case may be, of an equal quantity of the product, or of the material of manufacture.” Board of Trade v. Christie Grain & Stock Co., 198 U. S. 236, 249 . In United States v. Coffee Exchange, 263 U. S. 611, 619 , the Court refers to one of the classes who deal in “futures” as “those who use them to hedge, i. e., to insure themselves against loss by unfavorable changes in price at the time of actual delivery of what they have to sell or buy in their business.” The examples given in the G. C. M. indicate that when the Commissioner used therein the term “hedging” he had in mind the Court’s definition. I would limit the applicability of the ruling to one who has made a counter contract for the purchase or sale of an equal quantity of the product manufactured or raised, or of the material going into the manufacture of it.