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market factors were bullish. The Spanish-American war could not have come more opportunely if it had been contrived for the deal. Europe now desired to purchase its wheat at once, for a grave vision of Spanish men-of-war cutting off American wheat shipments arose. The French import duties of 36 cents per bushel were suspended. Other countries suspended similar duties. Anticipations of bearish crop news were not fulfilled. These conditions were most favorable for the exportation of wheat, and Leiter took every advantage of them. He seemed to have a monopoly of the wheat business. How profitable a business it was, however, is not known, for many claims were made that he was paying freight charges and granting large discounts on export wheat. That the demand was not purely speculative is shown by the fact that low grades of wheat were bought heavily. Leiter's profits were figured far into the millions by the newspapers, and the pluck and coolness with which he had carried through the great deal largely won for him the admiration of the American public, in spite of the prejudice against speculation. He continued operations by selling off his May wheat and buying about all the cash wheat that came into the market. His further purchases may have been necessary in order to maintain prices, but it was a widely prevalent opinion that he courted the inevitable by not furling sail. It is claimed that at one time in his wheat corner Leiter had $5,000,000 profits, but in the end he lost this and millions more. Wheat bought by him as low as 6431 cents per bushel sold at $1.85. At one period he controlled 35,000,000 bushels of cash wheat and over 140,000,000 bushels under options. He exported and sold 25,000,000 bushels during the course of his famous deal. He was carrying about 15,000,000 bushels of cash wheat in the Northwest and in the course of transportation to Europe on June 13, 1898, when the tremendous load became too heavy to carry, and his deal ended. The details of his manipulations cannot be known. He doubtless lost a fortune, and he completely disorganized the wheat business for 10 months. It is claimed that ‘‘Leiter's gambling in human food” caused a great rise in the price of bread in England and on the Continent, and that it brought about riots and bloodshed in Italy. While the operations of Leiter undoubtedly had a marked influence on the price of

wheat, an influence that was not merely that of a speculative squeeze, but such as to be felt throughout the world, it is entirely unjust to attribute to them the great rise in price and consequent hardships, for ‘‘the high prices of wheat from August to June were not mainly the work of Mr. Leiter. For the first time in many years the bears in the wheat market were destined to learn the lesson that the production of wheat might run far short of the required needs, and, whatever direction the efforts at manipulation had taken, the price of wheat was bound to make remarkable advances in the season 1897-98. Leiter was wise enough to recognize the way things were going and to early put himself in a positon to profit from the inevitable outcome, and it was only when he tried to control the market in the face of adverse conditions that he failed.’’’ It is claimed that an international corner of the surplus wheat of the world was proposed to the United States by the Russian government in 1896. The two governments were to buy wheat at $1 a bushel, and were to sell none below the price which would cover all expense of buying it. The theory was that all of the wheat which could be produced at that price would be needed for food, and that the consumers would pay the price without either government having to buy any wheat. This visionary plan met with no support from the United States. Public Gambling and “Bucket Shops.”—The ordinary dealer or producer can do nothing more foolhardy than to risk his small capital in speculating and ‘‘playing the market,” for he has no means of adequately knowing the world-wide conditions which determine price, he has not the judgment for properly interpreting such conditions even if he could know them, and those conditions often bring about results of such a magnitude as to sink a fortune completely in a very short time, if the speculator does not keep in touch and harmony with pricedetermining events. The character of speculation has changed somewhat with the increase in wheat supply, and fortunes are now made by men who watch the drift, and shape their way from day to day, “like prudent merchants, according to the current.’’ The “bucket shop’’ made its first appearance about a quarter of a century ago. It is always ready to take the opposite side

1 Emery, Econ. Jour., 9:62.

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Not only is it true that “the local bucket shop is as esticacious” as the board of trade in enabling the “novice prophets” to exploit their theories and lose their money, but it is proving itself to be more so. Varying estimates assume that there are from 10,000 to 25,000 bucket shops scattered throughout the whole country. This is ample evidence of the profits of the business. Competent observers have estimated that these establishments have deflected from the regular speculative exchanges from 50 to 75 per cent of the business that would otherwise go to them. The New York stock exchange requires the speculator to deposit a 10 per cent margin on his transactions, and the smallest unit traded is 100 shares. The consolidated exchange in Chicago requires a 5 per cent margin, with 10 shares as a minimum unit traded. These minima are large enough to keep out a large class of persons with small capital whose operations are pure gambling. The bucket shop, however, usually requires a margin of only 1 per cent, and the minimum unit traded varies from ten to two shares. The bucket shop is prepared to do business with a half point margin on two shares. What is true of stock is also true of wheat as to the relative size of margins required and units traded on regular exchanges and on bucket shops. Consequently the bucket shop affords greater opportunity than the exchange to ‘‘play the market” and it is more frequently sought by those who have little capital and less knowledge on which to “speculate.”

The professional speculator has a true economic function in our system of distribution, but gambling by outsiders is pernicious, and should be done away with as soon as this is practicable. Such gambling, however, is not more pernicious when done on the floor of a bucket shop than when done on the floor of the Chicago Board of Trade, a fact recognized by the United States Circuit Court of Appeals in more than one instance. In view of the business which the bucket shop is diverting from the regular exchanges, it is but natural that the latter should oppose the bucket shop with all their powers. Greatly as the boards of trade pride themselves over the high and lofty plane of honor upon which they transact business, they do not hesitate to designate' uncompromisingly as ‘‘pernicious gambling” the operations of bucket shops—the very operations, in a large measure, that were formerly carried on upon the boards of trade. This opposition is merely an effort to regain that part of their business which has attached to it the bulk of the evils of all their business. Broker's ‘‘ bucket’’ orders on their own account, a practice which the exchanges endeavor to stop. Manipulations in General.-Speculation depends upon price fluctuations, but price fluctuations are decreasing. There is then the tendency to resort to all possible ‘‘manipulations’’ in order to cause abnormal fluctuations in price. Fraudulent and immoral means are often utilized in such efforts. In the produce market price can be influenced by the operator in only two ways. “He must either buy or sell the commodity himself, or he must persuade others to buy or sell.” By such operations, however, a speculator with suslicient capital may bring about a rise or fall in price, but it seems to require unexpected crop conditions favorable to the manipulation in order to bring Su ('cess. Legal Restraints.-The feeling against speculation in the United States has been strongest when prices were depressed. In the early nineties it resulted in the introduction of several ‘‘anti-option’’ bills in congress. None of them became a law, but two of them passed one branch of congress, and there was much public sympathy in support of the measures. Much earlier some of the state legislatures made an effort to stop trading in futures. Some very stringent laws were passed by various states during the eighties. They generally considered short selling and trading on margins as gambling. The tendency to legislate in this direction seems to have lessened, and some of the statutes which were passed were soon repealed. Speculation in Foreign Countries.—Sales of grain before it was threshed were forbidden in England in 1357, and in the Hanse cities in 1417. Time dealings in grain were forbidden in Antwerp in 1698. During the first half of the eighteenth century, practices similar to those of the modern speculative market were common in the European grain trade. The system did not become widely developed, however, until the nineteenth century. In 1883 the Liverpool clearing house was established in connection with the maize and wheat trade. It began after the American fashion, but was not extensively used before the

1 Hill, N. Y. Commercial, Sept., 1903. Indus. Com., Vol. 6.

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