MARKET METHODS AND PROBLEMS 505 



result in low prices, that is, to the "short seller's" advantage, then, 

 because they are such, he must hasten to buy up the necessary amount 

 of wheat which he originally undertook to deliver during that month ; 

 and, by so doing, he and his fellow " bears " create an increased demand 

 which checks the prevailing tendency to lower prices. Thus, while 

 the short seller may at times be in a position to depress future prices 

 by creating a fictitious oversupply, when it comes to spot prices, i.e., 

 the only prices which are of any practical interest to the farmer, the 

 "bear" appears as a buyer and thereby, if at all influencing prices, 

 must raise them. 



Let us look now at the "bull" side of the market. The "long" 

 has bought a quantity of wheat in July to be delivered to him by the 

 "short" in October. Again, as in the case of the "bear," the trans- 

 action will have no effect upon current spot prices. Even if we were 

 to admit that the speculative purchases and sales for future delivery 

 could effect current spot prices, the opposite effect of the transactions 

 of the "bull" and the "bear" would balance each other. What will 

 be the effect of the transaction on spot prices in October? The 

 original "long" appears now as a seller in liquidating his purchases, 

 and to that extent apparently increases his supply and forces down 

 prices. But it is only apparently, for in reality he cannot add one 

 grain to the actual supply on the market. The wheat he is ready to 

 sell has just been delivered to him by the original short seller, and 

 would have just as surely been offered for sale by the farmer if there 

 were no short sellers and long buyers in existence. It may be urged 

 that the same quantity of wheat which would have been sold but once 

 by the farmer is now offered first by the farmer to the short seller, 

 next by the short seller to the long buyer, and finally by the latter 

 again to somebody else, thus swelling the apparent supply and tending 

 to lower prices. But in all such cases the fictitious supply has been 

 met by a fictitious demand, which have all been balanced long before 

 the month for which the contract has been concluded has arrived. 



The professional speculator is in the market not for the purpose 

 of either depressing or raising prices. He is as ready to make money 

 on a< rise as on a fall in prices. In either case he would try to ascer- 

 tain what the probable tendency of the market is before he embarks 

 on any undertaking. No speculator or clique of speculators in their 

 senses would undertake to try to depress prices in the face of a rising 

 market. The repeated failures both of "bull" and of "bear" cliques 

 have not only served to teach speculators a lesson and thus diminish 



