PRICE FLUCTUATIONS 



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prices are sure to fluctuate. If all speculators were to cease activi- 

 ties entirely, or were to become an extinct species, price fluctua- 

 tions would continue. For instance, the price of United States 

 Government bonds fluctuates from day to day, and surely no 

 one believes speculators are trading in these low-interest, high 

 grade investment securities. 4 If the least speculative commodity 

 in the world a United States Government bond fluctuates in 

 price daily, as it does, it is clearly evident that price fluctuation 

 is not the result of speculation. Instead of causing price fluctua- 

 tions, speculation in the pit tends to check price fluctuations. 

 Speculation in the pit is a process of putting on brake, checking 

 a rapid rise in price (a " bulge") and checking a rapid fall in 

 price (a " break"). As evidence of this, it is a noteworthy fact 

 that barley, which is not subject to future trading (pit specula- 

 tion), fluctuates much more widely in price than does either wheat 

 or oats. Wheat and oats are both traded in the pit; both, like 

 barley, are world-wide crops, grown and consumed very widely 

 for a variety of purposes. 



Price Fluctuations. Taking Chicago Board of Trade figures 

 for a period of 18 normal years, when we were not engaged in 

 any war, we find price fluctuations in these three grains (spot 

 prices) to fluctuate as follows, by per cents: 



Cash Price Fluctuations, by Per Cents, for 18 Years, of Wheat, Barley, and Oats, 

 Chicago Showing Widest Fluctuations in Barley. 



From the above table it will be observed that wheat only once 

 showed a variation in price in any one year of over 100 per cent, 



4 See Appendix to this chapter, showing fluctuations in prices of United 

 States Government bonds. 



