A THIRD FUNCTION PERFORMED BY SPECULATORS 269 



This quotation also illustrates the truth that to the extent 

 that producers are organized and able to conduct collective bar- 

 gaining, to that extent the need of speculative buyers is lessened 

 and to the same extent " direct marketing" with manufacturers, 

 canners, exporters, wholesalers, etc., is made possible. Obviously, 

 however, the speculator by making a market is thereby performing 

 a service and deserves credit rather than condemnation for it. 



A second function of the speculator may be called his financial 

 or banking function. In many lines of trade the speculator may 

 be called on to finance the movement of the crop from the primary 

 point to the larger, central markets. He becomes, in a sense, the 

 banker for his shippers, commonly advancing them money before 

 the arrival of the goods, and in some cases, many weeks before the 

 goods are shipped. 3 This financial relationship is one of import- 

 ance to the farmer himself, for he is anxious to receive his money 

 when his produce reaches the primary shipping point, although 

 this point may be separated in time and distance a long way and 

 a long time from the final consumer. Even where organization 

 is efficient and cooperative selling well-nigh perfected among the 

 farmers, as in the case of the Eastern Shore of Virginia Produce 

 Exchange 3,000 growers selling through one central office the 

 banking or financial aspect of marketing is held to be of more 

 importance than the so-called "direct marketing." This farmers' 

 company does not market direct to small dealers in small towns, 

 near large distributing centers, but markets through the large 

 regular dealers, who in turn re-sell to the smaller cities. Consider- 

 ing financial risks involved in dealing with a vast number of dis- 

 tant small dealers, the added expense of more bookkeeping and 

 more credit-rating investigations, it is cheapest in the long run 

 to deal with the large dealers as above noted. Since the large 

 dealers in this case make a practice of buying for cash f .o.b. ship- 

 ping station, they are performing a very real service of a financial 

 nature. Although produce is shipped into forty States and two 

 foreign countries, the grower gets his pay at the latest within ten 

 days of delivering his produce at the shipping station. 



A third function performed by many speculative middlemen is 

 that of warehousing or storing. In a few cases at the present time 

 we have public warehouses, but even in that case the title to the 



3 The most conspicuous and extreme case of this credit relationship is 

 that furnished by the old cotton " factor" of the South, who advanced part of 

 the money before the crop was planted. This was clearly an awkward and 

 expensive form of credit, fitted only to a primitive condition of agriculture. 



