The Washington herald., 1920-12-21
URGES PRESIDENT
T0ACT ON FALLING
WHEAT FUTURES"
Federal Trade Commits
sion in Answer to Request
4 Charges Gambling.
SOLUTION OFFERED
Seven Factors Combine to Re
duce Prices, Commission
Asserts.

A Large volume" of future trad
ing in wheat Is mere gambling" "
. involving great economic waste,
and should be stopped by Congress
sional regulation. the Federal Trade
Commission wrote President Wilson
yesterday.
The commissions communication
constituted its report in reply to
the Presidents request for a study
,of the causes of falling wheat prices.
The commission advised the Presi-
dent he has no power to prevent i'm
portation of foreign wheat. as de-
handed by farmers hit by falling
\ prices
The commission also recommend
ed that government selling machin-
cry be set up to deal with central
lied wheat buying agencies, now
maintained in the United States by
foreign governments, to protect the
American farmer against possible
price manipulation by these agen-
cies.
Seven Factor. Unite.
Seven factors combined to reduce
wheat prices in the United States,
the commission reported. These
factors were given as (1) a world
Wheat crop bigger than in 1919; (2)
concentration OF foreign govern
ment buying in commission.
which bought heavily in the spring
but later reduced it's demands: (3)
unprecedented importations from
Canada this fall. coupled with a
discount rate of exchange: 4) the
record-breaking yield of corn and
oats which helped to depress wheat
prices; (5) slackening of the DO
nestle demand for flour this fall:
go general decline of all commod-
ity prices, and (7) change in credit
conditions with the resulting dis
position of distributors to refrain
from accommodating or maintaining
usual stocks" until conditions are
stabilized.
Wheat has declined in price less
than many commodities" the COM
mission wrote. "and less than most
agricultural products. on the basis
of wholesale prices
h The decline in prices would ap-
pear to be in part due to country
wide and worldwide conditions.
Abrupt changes in prices and COM
following changes in volume of pro-
duction, variations in demand from
Year to year. and marketing un-
evenly distributed through the sea-
sous An Improvement in the situ-
alton would follow from greater
regularity Of production from year
to year in so far as such regularity
is subject to human achievement,
and more even marketing of grain
through the year.
Speculation Not Indispensable.
while the commission believes
that speculation in wheat futures
is not an indispensable part of the
marketing process and may some
times be highly Injurious. the COM
mission is not in this respect pass
ing upon the whole subject of future
trading. Future contracts may have
a legitimate use for hedging In
this connection II Is claimed that
future trading performs an insur-
snce function where ordinary insur-
ance methods would not be prac-
ticable, and that undue restriction
of future trading such as would de-
priye the grain trade of this service
might result in grain dealers re-
yauiring larger margins and conse-.
Nquently result either in lower prices
to the farmer or higher prices to
RIhe consumer.
without now expressing an opin-
ion on this subject, 1t appears that
there is a large solL ne OF future
trading that is mere gambling and
involves great economic waste. The
remedy cor this lies in Congress
Sional action TO prevent trading
witch Is essentially gambling"