242 THE BOOK OP WHEAT 



Dealers in Grain as a class became differentiated from the 

 producers at an early date. They frequently bought and sold 

 wheat, not merely for trade profits, but to make an additional 

 profit by taking advantage of the fluctuations of price result- 

 ing from variations in supply and demand. They bought wheat 

 outright, and held it for a higher price, and thus they belonged 

 to the same class of speculators as did the producers who held 

 wheat. With the great development of the arts of transporta- 

 tion and communication during the middle of the nineteenth 

 century, there arose the market which covered the entire civi- 

 lized world. In this world market, great, sudden and unforeseen 

 changes in the conditions of supply and demand occurred, and 

 the uncertainties of trade became so great that the possibility 

 of a total loss of the capital of the dealer grew very burden- 

 some. Before the great and varied mass of phenomena which 

 affect the price of wheat, the producers and ordinary dealers 

 stood quite helpless, as far as forming an adequate judgment 

 of effect on prices was concerned, even if they could secure 

 timely reports of changed conditions. As a result, dealers be- 

 came differentiated into two classes. One of these classes, the 

 wheat dealer proper, is in the market simply to secure those 

 trade profits which always exist independently of speculative 

 profits. The other class is that of professional speculators. 

 This special class formed organizations in the large exchanges, 

 all of which existed as commercial institutions in pre-specula- 

 tive times. The organized speculative market arose in direct 

 response to conditions which brought risks that were intolerable 

 to the ordinary dealer and its development was hastened be- 

 cause it took place at a time when the risks usually incident to 

 the wheat trade were greatly augmented by those resulting from 

 the Civil War. While two typical classes of persons, dealers 

 and speculators, are engaged in the grain trade, it must not be 

 understood that these classes are mutually exclusive. There 

 are large millers and producers, for example, who keep well 

 enough informed on the market to engage properly and profit- 

 ably in speculative dealings. 



The Machinery of Speculation. The early speculator stood 

 ready to purchase wheat at the current price, and he as- 

 sumed the risk of a fall in price in the hope that he might gain 

 from a rise in price. "Bull" speculation, which consists of 



