THE PRICE OF WHEAT 147 



money and exercise his privilege of not delivering. The 

 "call" is the exact reverse. By it a person acquires the 

 right to receive from another individual a certain amount 

 of a commodity at a stipulated price. If the price has 

 fallen the buyer will not exercise his privilege of demand- 

 ing delivery, but will lose his "call" money. But in 

 the event of a rise in price he will demand the goods 

 and profit by selling them again at the higher price. 

 By means of "future dealings," "spot" transactions, 

 and "privilege" contracts, speculation relieves trade 

 of the risks of fluctuating values by the organisation 

 of a special class who stand ready to take or deliver 

 commodities at market price. In so doing, this class 

 performs a service to society by directing commodities 

 to their most advantageous uses. This directive influence 

 is exerted through prices, and it is necessary to examine 

 the influence of speculation on prices before dealing 

 with the assumption of risk by the speculating class. 



(c) Beneficial Effects of Speculation. The idea that 

 speculation determines prices "regardless of the law 

 of supply and demand" is erroneous, and based 

 upon a misconception of the nature of value. "The 

 more free the competition between buyers and sellers, 

 the more minutely is price regulated by demand and 

 supply, and nowhere is competition more free than on 

 the exchange."* It is through demand and supply, 

 which are themselves speculative, that the forces of 

 speculation operate. By carefully watching conditions 

 controlling demand and supply, operators in the ex- 

 changes are in a position to make fairly accurate esti- 

 mates of future prices. The speculator makes his offers 

 to buy and sell entirely on his estimate of future values. 

 In these circumstances it is essential that the closest 

 scrutiny of all the factors that may influence future 



*Emery, < ' Speculation. " Page 113. 



