THE PRICE OF WHEAT 143 
eost of production (including rewards for managing 
capabilities) will approximate closely. The less the 
degree to which this freedom is realised, that is, the 
greater the economic friction, then the greater will be 
the diversity between cost of production and normal 
price. 
Cost of production in the long run is the determinant 
of value, and over long periods the price of wheat cannot 
diverge widely from the expenses of producing it. Just 
as the minimum limit to price is the cost of production, 
so the maximum limit is fixed by the utility to the 
consumer. The tendency of economic forces, however, 
we have seen is to fix a price which is a close 
approximation to cost of production, including fair 
profits to the producers. 
Under normal conditions, such are the factors which 
enter into the determination of the price of wheat. 
Certain other influences operating of recent years are 
of specific importance, and require passing reference. 
5. Speculation. 
The market for wheat affords, perhaps, the best 
example of the latest developments in the mechanism 
of speculation. The speculator undertakes an important 
function in the marketing of wheat, and in examining 
the factors under which wheat prices are fixed it is 
necessary to give an account of his work, and to estimate 
his influence on the market. This is the more imperative, 
in view of the fact that this matter is the object of much 
ill-informed criticism. But the complex nature of the 
problems connected with modern speculation necessitates 
careful treatment. At the outset we are confronted with 
a great divergence of views on the ethical side of the 
subject. Hostile criticism on this point arises from two 
rather conflicting points of view. In the first place, it 
is alleged that speculation is mere gambling, and has 
