The beginnings: Keynes, Hicks and Kaldor
In his Treatise on Money (London, 1930, vol. 2, p. 142) Keynes says that in an organized market for raw materials there are, at anyone time, two price quotations. One is for immediate delivery (the spot price); the other is for delivery at a later date, say six months in the future (the forward price). For a producer whose period of production is six months, it is the latter price which is important in determining the extent of his operations. It may appear that it is the price which the producer expects in six months which is important in this respect, but Keynes's point is that he can sell the product forward even before the productive process is begun, and thereby hedge against the risk that the price will fall during the period of production.