144 WHEAT PRODUCTION IN NEW ZEALAND 
no reference to actual trade. Secondly, speculation is 
said to be so prevalent in exchange that it is now all- 
powerful in trade, ‘‘which has become demoralised 
by its subjection to fictitious trade conditions.’’ The 
difference between speculation and gambling is not 
clearly defined, but it arises from the fact that the latter 
is artificial, and creates no new value (in fact, it destroys 
utility) while the former assumes real risks, and often 
does create value. The subsequent exposition will be 
an attempt to illustrate this function of speculation, and 
to estimate its importance in the wheat market. 
(a) The Rise of the Speculative Market—The initial 
feature in the economic organisation of modern society 
is the market. The exchange of commodities regulates 
their production and distribution. This is done through 
the medium of value. The producer pays attention to 
those goods, which, in his opinion, command a higher 
price, just as the merchant sells at the time and place 
of highest price. Now this adjustment of production 
and distribution is accurate only in proportion to the 
degree of success producer and consumer attain in ascer- 
taining these values. Thus the test of the perfection of 
the organisation of trade is the promptness with which 
changes in value are learned, and the accuracy with 
which they are predicted. Where each individual pro- 
duced for himself alone, no such element of risk entered 
into the producer’s consideration. Later on, when the 
individual had a marketable surplus he, at first, combined 
the function of producer and trader. The next stage in 
the social economy marks the gradual evolution of the 
trader who assumed part of the risk. But with develop- 
ments in transport and communication the market for all 
the great staples became a world market. Thus local fluc- 
tuations were lessened, for local scarcity or abundance 
might be offset by opposite conditions elsewhere. These 
distant fluctuations, however, began to influence price 
