The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-12-15
Cheering SPECULATION.

Farmers recently have lost great
deal of money and have been exposed
to ruinous losses by the declines in the
markets for their products. But the
declines would have been greater,
holds the Wollman Review, if there
had been no organized speculation. In
London, in 1895. it points out. wheat,
for example, sold at ten shillings per
bushel. In 1886 it sold at ten pence
per bushel. Here was a decline from
$3.50 per bushel to 20 cents in one
year. There were no boards of trade
in those days.
Congress, of course, can pass meas
ures destroying the cotton exchanges
or the boards of trade that deal in
grain and provision contracts. con-
tinues the Review, and it can cripple
them by restrictive provisions so that
they can no longer perform their
function. But there IS one thing con-
gress or any other legislative body can
not do. 1t cannot deprive the great
staple markets of their element of risk
or eliminate from them the specula-
tive feature inherent in them. 1t can
not by any statute prevent wild swings
in prices.
In its defense of boards of trade the
Review continues as follows:
Those who have studied the function
of speculation have learned that it can
not be d.smissed>as mere gambling, but
that there is fundamental necessity
for it's existence. Before the establish
ment of organized speculation in COM
modities the risk of price changes was
assumed by the great merchants. The
| little dealer, the retailer, who did not
| buy or sell far ahead, was not greatly
affected. The powerful merchants al
last found that they could not bear this
risk and survive financially. The eco
nomic needs of the world demanded
that some one else take this risk. Out
of this demand a class of specialists
sprang up-speculators. Instead of 9
dozen or a hundred big merchant firms
assuming the risk of price changes
which would have been ruinous tC
| them thousands of traders all over the
country-all over the world-dividC
the risk of price changes among them
Sometimes they make profits, some.
times they make losses. That is theii
affair.
] Legislative opinion to the contrary
Notwithstanding, speculation does no
make extremes of prices. 1t limit.
| extremes 1t stabilizes prices. Fluc
| tuations are always wider in markets
where there is no organized specula
ton than in those where the system il
perfected for trading in future con
! tracts. The short seller prevents tn,
extreme high level by offering a futur,
supply, and he prevents the extrem,
low level by buying back these con
tracts when the market breaks. II,
| turns "bull' when he believes price!
have reached an investment level o.
| a level where the chance of loss is no
great If he continues to average hi
purchases down.
1t is urged by some who favor tn,
kind of legislation proposed by Sen
ator Capper that the real object is t.
eliminate the "bucketshops"-th,
small dealers. But a bad bushes
can not be justified or condemned OF
a basis of its magnitude.
Grain spectators probably will fin,
a way to circumvent any law that cal
be passed. If producers would pre-
vent gambling in their products the,
must arrange to control the outp,i
themselves. There is no speculatio,
in oranges