MEDIEVAL AND MODERN PRODUCE MARKETS 847 



comes for delivery of raw product under the future contract, the 

 miller must go into the spot market to buy wheat. He is thus 

 under an obligation to buy at the time he enters the flour market 

 as a seller of finished product. At both moments he is buying 

 and selling. Gains on one transaction will clearly balance losses 

 on the other. The manufacturer is consequently independent of 

 changes in the values of the raw materials. 



The manufacturer can manage more readily if he has a large 

 contract with the government for the supply of the army or some 

 such service. In this case, at the time of bidding on the con- 

 tract, he knows the prices of all the future options for several 

 months in advance, and he can thus calculate pretty exactly what 

 his raw materials will cost. If his bid is accepted he can buy 

 on future contracts for the entire period that he will be working 

 on that order. The cost of his raw material will thus be settled 

 at the outset. He is clear of risk and can make his money on 

 the process of manufacture. 



In the old days all speculation was for rising prices. Goods 

 were bought and held back from the market in expectation of a 

 rise. If the market was ill informed, the holding back of goods 

 might cause a considerable increase in prices, and, if the goods 

 were carefully unloaded without at any time revealing the extent 

 of the supply concealed, the operators might realize considerable 

 profits. Such operations were a serious problem in the Parisian 

 grain trade in the late seventeenth century, and probably this 

 was a characteristic form of bull speculation in the older markets. 

 The essence of the transaction was to curtail the visible supply, 

 to have large supplies concealed in close proximity to the con- 

 suming market, and to dole out these invisible supplies with 

 scrupulous care. The relative isolation of different markets made 

 such transactions relatively easy. The supply did not really come 

 into sight until it arrived in the market place where it was to be 

 sold to the consumer. In modern market systems such transac- 

 tions are impossible because the supply comes into full public 

 notice in the wholesale markets of the producing regions. The 

 great consuming markets are to-day so well informed of possible 

 supplies that they are in some cases distinctly non-speculative in 



