Evening star., 1925-06-20
BACKGROUND OF EVENTS
BY PAUL J.. COLLINS.

lative craze, from l00, ,000, 900 TO I2a.-
U0O.OOO bushels and in 10 days more
than billion bushels were sold. while
the entire wheat production of the
United States was only 5000 O0o
| bushels last year?
! x =
/ The United states Government
! abolished lotteries several years ago.
| but while several grain States have
Undertaken TO XII grain gambling,
ana prohibited trading in futures
their success has been questionable,
largely because the production is in
other States than the location of the
gambling markets. 1t is a matter of
! interstate commerce, therefore, and
can be reached only through Fedora
| regulation.
economists warn of the danger OF
| ill-conSidered methods, which. while
! aimed to stop the gambling, may
| cause such decentralization of the lesi-
/ innate markets as TO ruin the very
/ producers it is aimed to help. To de-
stroy all grain exchanges, it is ar
| gued, would be to throw all grain
handling into the hands of few
firms financially strong enough to buy
| 1t outright and carry all risks OF
| world price fluctuations until il was
! sold.
! That would require a far wider mar
! gin of price-a far greater reduction
to the tarmers-than they now suffer,
| between the investors buying and
selling prices. At present every deal
| er who buys actual grain immediately
hedges by selling the same amount
and grade for future delivery, hsnce
| he buys only on the price of q "fu-
ture, unless he is a miller ready TO
use the spot grain Immediately.
The future price is fixed by the
bidding on the basis of specula tion.
That is legitimate sueeulation-a very
different thing from grain gambling
and, it is ella aimed, it serves as the bal
ance wheel of the markets, keeping
them steadisr than possible withouI
hedging. Hedging is like insurance
against losses, enabling the speculator
to operate on closer margins than
would be possible on a mere invest
ment basis. In all legitimate speculs-
taon buyint: thu buyer obligates him
self to receive the actual wheat. nnd
the seller agrees to deliver actual
wheat within the month named In
grain gambling no wheat Is owned
! by the buyer or seller, nor is il ex-
pected to be handled. The transaction
is not based on real wheat nor on
known conditions. hut is a mere bet
on the rise or fall or prices.
Bucket sndps gamble in differences
of market prices, but they never de
liver real wheat. That is "bucketing."
but all bucketing is not confined 10
bucket shops; more is done in the
legitimate exchanges" where the
cloak of Legitimacy covers them under
the camoufiage ut regular dealing m
til the transactions become too scan
dalous.
A standard author, T. Henry Dewey
of the New York bar. writes:
The speculator deals-that Is, huys
and sells things for a difference in
prices-and the gambler deals in diff,
ferences in prices. II follows
that the test of whether any given
state of facts constitutes speculation
or gambling on prices Is not whethe,
factual delivery was made or intended
but whether the right of the buyer to
require and the seller to make actuai
delivery. existed.
| Under that definition 1t is gambling
to sell more of any commodity than
| exists, or is accessible to the seller.
/ Albert w. Atwood of Columbia Uni.
versity thus distinguishes between
speculation and gambling:
THE gambler acts blindly and as.
sumes risks whether the exigencies o!
the situation require that course o.
not. The speculator, however, as,
sumes those hazards which must fall
to some ones lot, II not TO his own
Every business teens with risk and
chance. and the speculator is best Al.
ted, by his training, to cope with them
adequately. 1t Is not a question of an
artificial institution; speculation is an
inherent aspect of commercial inter.
course and must be taken into account.
willingly or not. Moreover, specula.
ton presupposes intellectual effort:
gambling ONLY blind chanca
The speculator assures the farmer the
receipt Of a definite sum and thus re-
moves the element of risk from his
shoulders. AS recompense the specu-
lator gets the profit, IL any exists and
a loss II the market goes against his
expectations"
| VIII the farm biocs seeking to bei.
ter farm profits abolish the specula-
| tors price insurance IN the operation
Of destroying gambling7
tcopyrisbt iszS; By esus =. cosffns.s