The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-03-27
Function Of Legitimate .Specular
- ton,

!
+ ton.
| The passage Of the Ward antibucket-
shop bill by the state senate naturally
brings up again for consideration the
principles underlying the subject of
| speculation. Much as the matter has
been discussed there are still "a. great
many people who incline to the view of
condemnation of all speculation, yet
best economic authority has not failed
to note its advantages as part of the
great work Of congress, and wide inves
tigation has proved it highly valuable
If not essential to the handling Of the
big commercial and financial things Of
the day.
It is interesting in this connection to
recall that in 1898 the government ap-
pointed an industrial commission to in
vestigate the effects Of speculation upon
the value of farm products, Senator
Kyle of South Dakota being chairman.
AS a result Of the investigation there
was recognition and sharp definition by
competent authority Of the difference
between speculation of the legitimate
kind, and that entirely harmful or
illegitimate, as represented by the buck
etshop.
The commission found the principal
I benefits Of speculation as applicable to
grains to consist in the lessening of
the risks of distribution that ordinari-
~ would fall upon the farmer. It
was, found that, if consumers were to
assume the risk Of distribution there
would be no adequate provision for the
future, while it, the distribution risk
were thrown entirely upon: the farmer,
the result would be an irregular supply
of subsistence calculated seriously to
disturb the efficiency Of the existing
plan Of handling the great crops and to
work for greater instability in general,
Speculation, as the middle power, comes
in between the two and serves we'll.
The commission went beyond the
confines of the United States into Rus.
sia and India and found that in the
# former country, where there are no
! speculative grain markets and where the
matter of crop distribution is handled
bureaucratically, conditions operate
against the producer and are deplorably
IS bad. In India the government has
S. come to recognize speculative distribu
I ton of supplies as better for the gen
eral good than bureaucratic distribution
RI could be.
The speculator the commission found
to, be assuming the greatest hazard Of
any in the whole business organization
of society, but conclusions reached were
that it is for the greater good of the
whole that this be permitted; that with
out speculation, to make a. condition
equaling the present state of marke
stability, consumers would have to pay
higher prices, or else the farmer woult
have to enter the market with fewer
competitors in sight to buy and carr,
his surplus. The finding of the com
mission was that speculation honestl,
conducted, is a highly important par
of the business structure Of the day.
The line of differentiation between
the regular exchange and it's patron an
g the bucketshop and it's victim was close
ly drawn. Noting the general dishon
esty Of the bucketshops and ;the~pe1
niciousness Of their practices. the com
mission nevertheless found the creates
evil not in these, but in the fact tina
the business given them has no effec
whatever upon values. At least 80 pc
cent of all country spectators are buy
ers.s% When they buy they believe thei
orders will have effect in advancin
prices, as naturally would be the case
h1,f hoir hrc oixa ~
bucketshop there is no such effec
while as for themselves they are draw
into. speculation Of the rankest kind
indeed, they are not specializing at al
but have gone, across the line int
gambling, pure and simple. .@ss:::..e= -
At the time the commission did III
work there were in the United State
about 400 bucketshops. It was: est
mated that each, place did bushes
in grain futures of buying and sellis
10000 bushels a day, an estimate thu
81 any grain man will concede to be yer
small, and which would have been
mere drop in the bucket to the big, sho
that until recently did business in Mi
neapolis. Yet from even SO small a
estimate of average daily busine:
there was shown to, be total of 8 ,00l
81 600 bushels a day which these eshol1
pretended to buy OF sell, diverted fro
the regular exchanges, that if throw
into the legitimate markets could nj
fail to operate for greater activity an
greater stability.
With the passing of the bucketshop
said the commission, one great caus
of price depression will have disa7
peared, and when the farmers soat
realize what these parasites unon IL