284 PRINCIPLES OF RURAL ECONOMICS 



Speculation in farm crops. There is also a question when to 

 sell. Is it best to sell as soon as the crop is harvested or to hold 

 for a rise in price, or may it be better to sell before the crop is 

 harvested ? Either to sell before the crop is harvested or to hold 

 for a rise in price involves speculating on the market. As a gen- 

 eral rule, it is safer for the farmer to stick to his work of farm- 

 ing and to leave speculation to those who make a specialty of it. 

 This is a principle well recognized by successful business men 

 in other branches. The successful miller, for example, avoids 

 speculation as far as possible. If in order to get business he 

 must contract long in advance, there is a speculative risk in- 

 volved. This risk he uniformly covers by buying his wheat in 

 advance. That is to say, suppose a miller has contracted to 

 deliver 1000 barrels of flour per week for the next six months 

 at a fixed price. He knows what the price of wheat is, but he 

 does not know what it will be three months from to-day. If the 

 price should go up, and he should continue to buy from week 

 to week in order to fulfill his contract to deliver flour at the 

 price agreed upon, it might wipe out his profits, though, of 

 course, these would be increased if the price of wheat should 

 fall. But of course his business is that of milling, and that 

 requires all the attention and energy which he is capable of 

 expending. He has no time nor energy, therefore, to expend in 

 studying market conditions and determining whether to spec- 

 ulate or not. To render himself perfectly safe he buys to-day, 

 at a fixed price, wheat enough to last him for the whole six 

 months and to enable him to carry out his contract. By this 

 process he may know where he stands. While it looks like 

 speculation, it is in reality a means of avoiding speculative risks. 



Again, a miller who has not a contract for delivering flour at 

 a specified price, but who expects to be able to sell his flour at 

 some price as fast as it is manufactured, may decide, in order 

 to be sure of a constant supply of wheat, to buy in advance a 



