Evening star. [volume] (Washington, D.C.) 1854-1972, 1948-01-23

In The following thirty trading days,
Mr.. Mehl reported to the Congressional
investigating committee, trading in
wheat was reduced 45qs. That's what the
Administration expected.
But = and here's what the Administfa-
tien li1n't expect - in that same period.
the tyiee rose sill higher. According to
Mr.. Mehl, it advanced 2ot bushel.
The NsW York Times foresaw this pos.
sibiliy when it said on October II:
1t is time for some plain speaking about
this issue Of gambling When the
President began his food-saving cam
P,isn -. one Of his FIRST steps was to
demand that trading margins on the
commodity exchanges be raised from
II per cent to 1873 per cent :.
The policy :. was ill-advised and
unfortunate. But it would be infinitely
more unfortunate and more costly to
perpetuate the error by attempting to
keep alive the fiction that speculation
is at the root Of the nations food-price
troubles"
Yet that is exactly what the Admins.
tration is doing. It is using the hobgoblin
of the Spectator to try to scare Congress
into enacting law that would give the
government power to regulate margins as
itlmight see fit.
Government Wants to Rig
Prices
The present regulation which the gov.
ernment exercises over the markets, be.
ginning with the Grain Futures Act of
1922, is all to the good, for that regu.
lation is designed to guarantee that the
markets shall really be free markets -.
free from any suggestion that they are
rugged OF that prices are Improperly in.
Auenced, r
But the proposed new grant of power
would constitute regulation of an utterly
different stripe. If the Commodity Ex-
change Authority were given power to
regulate margins at will, it would mean
that the government was going into the
business of rigging the market itself. For
the sole objective of such legislation
would be to try to manipulate prices BY
manipulating margin requirements.
No government agency should be H.
lowed to tinker witb commodity margins.
The governments role in the market
should be restricted to that of umpire If
it assumes any measure Of direct control,
the markets are no longer free, and the
market prices are no longer free or fair.
Canada Has Tried Regulation
and Failed
Consider what has happened in Canada
where for the last few years the Canadian
Wheat Board has been set up as the sole
agency through which wheat could be
sold. This, in summary, is the story that
Mr.. H. G. L. Strange, research director
Of the Searle Grain Co. Of Winnipeg told
our Congressional investigating commit
tee At the hearing on December ;.
Last year, Canadian wheat growers got
about $40 million less for their crop
Fl, 500 4 farmer-than they would have if
it had been sold on the u. S. free market
Next spring, lot Of Canadian wheat just
isn't going to get planted. And lot more
won't ever get to market; it will be fed to
livestock and poultry.
But the real point of the story is that
the Canadian Wheat Board made what
now appears to have been one OF THE big
ge5t price bone,s of Ill times. In July,
1916, it thought there was going to be
surplus of wheat, and 50 when it signed
an agreement with Great Britain, prom
ising delivery Of 600 million bushels Of
wheat in the following four years, it set
the price for the first two years at only
$1.55 basbel!
In other words, as Mr.. Strange put it,
that board, established to prevent specu-
latofs from making profits at the expense
Of farmers" literally sold short 800
million bushels of wheat in rising mar
.sket. 1t sold its own people-the Canadian
tanners - short, for it was specializing
not with the governments money but
with the future income of :. farmers"
There Is No Substitute for
Free Markets
Nothing could make clearer the value
Of free commodity exchanges. No govern
ment board can ever weigh the thousands
of market factors that 90 to make fair
price. Its judgment can never be a sub.
stitute for the collective opinion of
thousands Of hedgers and spectators,
crystallized in open prices, openly arrived
at, on free commodity exchanges.
We have free markets now. Let's
keep them. Let's guard them.
This is the case for free trading on
free exchanges as we see it. 1t is obvious
that we have a partisan interest, for we
execute orders for thousands of our Gus
TONERS, hedgers and spectators alike, on
the futures markets, and in addition we
buy or sell cash commodities As brokers.
We do not buy OF sell any commodities
for ourselves.
We are proud of our business, proud
Of the opportunity to play an important
part in an industry that is 50 vital to the
welfare of the whole United States. But
let the record also show that our interest