Evening star., 1923-08-05
By ROBERT III. MOULToN.

lI TAs the operation of the
IL Capper Tincher grain fu-
lures act, which places the
"A grain exchanges of the
United States under government su-
pervision. been responsible for the
tremendous drop in the price of wheat
during the last three months?
Market observers and editorial
writer's in the grain belt have been
| unanimous in declaring that it has.
| They say that the great uncertainty
| created by the new law during the
! first month of it's operation resulted
| in driving the speculative public from
the market almost completely. Since
| that time other elements have entered
| into the conditions now obtaining.
On. April 26 last May wheat sold
on the Chicago Board of Trade At
s127 a bushel, an advance of approx
| mately 25 cents a bushel from the
low price of the preceding year on
| this delivery, and seemed definitely
| headed upward, the outlook for
domestic and foreign crops and the
! known consumptive demand of the
| world suggesting an ultimate price
| OF sl.50 or more.
| Alleged Effect of New Law.
Early in May the grain futures act
became effective on the board of trade
and almost at once a selling move
ment started. BY the middle of July
prices for all deliveries of wheat had
dropped below the dollar mark,
values being lower than at any time
since before the war At the pre- sent
writing prices are still below one
dollar.
In an effort to allay the fears of
the speculative public and to correct
| the general misunderstanding which
| seemed to exist rega riding the new
law, the Secretary of Agriculture early
! in May issued a statement to the
effect that the law. so far from put
| ting the exchanges out of business
as had been reported. did not in any
way interfere with their usual func-
tions, nor did it interfere with hedg-
| ing transactions or with ordinary
speculation in the buying and selling
| Of grain for future delivery: in other
| words. there was no limit on the
| quantity of wheat or other grain
which might be bought or sold for
| future delivery. But in spite of re-
peated assurances by the exchanges
| and in spite of attempts by the fed
eral Department of Agriculture to en-.
courage normal use of the grain fu.
lures market, wheat prices continued
| to decline.
| The situation was not improved
when, early in June, the Secretary Of
| Agriculture made a call upon al
| board of trade firms for the names
| of their customers having open ac-
counts, whether long or short. OF
| zoo, 900 bushels of wheat. This re.
suited in the dumping of large guam
titles of long wheat the market
and another big drop in prices
False Impression Created.
| The impression gained was that the
Secretary of Agriculture, given power
to make rules and regulations for
the execution of the grain futures act
| had made an Interpretation of what
he considered undue speculation OF
manipulation. and that Interpretation
appeared to be that when a trader
was disposed to operate on even d
moderat scale. it was inferable that
| he had started in to corner the mar
ket or to manipulate the price. The
| object of the regulation, of course, is
Ito prevent corners, but 100000 bushels
of wheat is about enough to keep q
Minneapolis mill running twenty
four hours.
| Farmers are now having an object
lesson of the value to them of a free
market for future trading. The fu-
Iture traders, whom the politicians call
| gamblers" always have carried the
risks of the wheat market. Evil
| IDENTIFY they are not now anxious tc
do so when a very moderate deal
| would require that their names be
sent to the government representa-
tive. who might question their mo-
tives and subject them to discipline
When the price of wheat seemed
definitely headed for the dollar mark
not only the wheat growers of the
country. but leaders in all lines OF
industry which are directly er in
directly affected by the success OF
failure of the farmer became thor
oughly aroused by the danger of the
| situation. All sorts of measures were
resorted to in an effort to hold W
the price of wheat One of these
measures was the calling of a ma
tional wheat conference by Gov. j
A. o. Preus of Minnesota. June 1921
governors of several states, farmers
millers, rail magnates, labor leaders
/ bankers grain exchange interests
and others met at Chicago and en-
tdeayored to arrive at a solution OF
! the problem.
! Wheat Surplus Advertised.
Unfortunately. the only thing ac-
| complished by the conference was th'
persistent advertising to the world
that there was a wheat surplus of
$4,000, 900 bushels in the United
States. The best statisticians had
been unable to find a surplus of more
than 100000, 900 bushels. Increasing
the surplus by 100000 bushels is a
serious matter and has a direct and
| important effect upon prices. The
| immediate result of the propaganda
| of the wheat conference leaders was
| further decline of 5 cents bushel
| in the price of wheat within the three
days following the arrival of the con-
ferees In Chicago.
| The Capper-Tincher grain futures
act was supported by the farm bloc
| upon the theory that it would restrict
speculation and that speculation tends
! to lower prices. On the other hand
/ the Attorney General of the United
States not long ago brought an ac-
/ tion against the Coffee and Sugar Ex-
! change of New York to restrain fu-
! fure trading in supar on tho ground