THE PRICE OF WHEAT 149 



producer, and consumer alike. Speculation alone makes 

 hedging transactions possible. Fluctuations in prices 

 are lessened, the short seller being the most potent 

 influence in preventing wide fluctuations in price, for 

 he "keeps prices down by short sales, and then keeps 

 them strong by his covering purchases." 



(d) The Assumption of Risks by the Speculative 

 Class. "The manner in which trade risks are shifted 

 to the speculative class is two-fold. First, through the 

 existence of a continuous market, and secondly, through 

 hedging sales. The former is due to a general change 

 in trade conditions, the latter is a special device for 

 insurance against loss."* 



The never ceasing opportunities for trade arising from 

 market fluctuations, give rise to the continuous market, 

 the existence of which is responsible for all the machinery 

 of modern speculation, the bulls and the bears, the buyers 

 and sellers, making new contracts with every indication 

 of changed conditions of demand and supply. The bulls 

 stand ready to purchase wheat at the current price and 

 assume the risk of a fall, in the hope that a gain may 

 be made by a rise in price, and for this purpose, they 

 "bull" the market by purchasing. The bears, on the 

 other hand, stand ready to sell wheat at the current price 

 for present delivery, or at a fixed price for delivery at 

 a given future date. The essence of "bear" speculation 

 is that the risk of a rise in price is assumed in the hope 

 that a gain may be made from a fall in price. 



Now the operations of these speculators are continuous, 

 and into the market may enter at any time the merchant, 

 producer, or manufacturer, to make such contracts as 

 are necessary in his business. Here there is a fixed price 

 for the delivery of goods of various qualities at various 

 times. It may be said that this buying of wheat for 



*Emery, in "The Economic Journal/' 1899. Page 46. 



