The Auckland Star: WITH WHICH ARE INCORORATED The Evening News, Morning News and The Echo. FRIDAY, FEBRUARY 6, 1925. THE WHEAT MARKET.

Auckland Star, Volume LVI, Issue 31, 6 February 1925, Page 4

The Auckland Star: WITH WHICH ARE INCORORATED The Evening News, Morning News and The Echo.

FRIDAY, FEBRUARY 6, 1925. THE WHEAT MARKET.

For the cause ihat lacks assistant*. For the wrong that needs riMtifone*, For the future in the distance. And the good that u>» •*"> da.

As is usual whenever a strong rise in . prices is recorded in the world's wheat | market, attempts are being made in all i the important, xvheat consuming conn- j tries to inquire into the sources of the xvheat supply and the conditions that , regulate, its price. In the United States, naturally enough, in vicxv of the j phenomenal level to which wheat lifts I soared, and the recent dramatic scenes in the Chicago Wheat Pit, there is widespread anxiety lest bread should rise in j sympathy xir in consequence. It is xvcll J knoxvn that the cost of xvheat is only a small fraction of the cost of the loaf, ami the price of bread in reality depends chiefly on distribution charges and the profits of the middleman. Hoxvever, xvhenever there is a strong upward movement in xvheat, whether the rise is due to a failure of supply or to speculative causes, the rise is liable to be reflected in the cost of living; nnd the question of the dear loaf is seriously agitating the American public just noxv. In Britain, on the other hand, which j depends very largely on external sources of supply for its subsistence, a shortage of xvheat always brings prominently before the minds of British statesmen and commercial men the economic and i national insecurity that results from Britain's present inability to meet her oxvn requirements. As xve have already suggested, fluctuations in wheat prices are due generally speaking to txvo main causes —variations in supply and the manipulations of i speculators in the xvorld's wheat, market. Under modern transport, con- I ditions the xvheat market, is literally world-wide, and such influences, wherever they may operate, are certain to transmit their effects from one centre to another with almost inconceivable rapidity. The more widely the circle of the wheat-consuming nations is extended, the more sensitive the xvheat market naturally becomes, not only because a constantly increasing -strain is thrown on a relatively limited supply, hut because the possibilities of gain, thus continually expanding, induce I speculators nnd "money kings'' to con- | ocntrate their attention on the xvheat market. It is a serious question | whether it is a safe or wise policy for i governments to permit the cost of living , to depend to such an extent as is possible to-day upon the sinister activities of the Wheat Pit or the Stock Exchange, and many distinguished publicists and statesmen hold, xvith Roosexelt, that "gambling in the people's food" should be treated as an offence against public morality, and should be heavily penalised. On this subject, however, there seems to be a considerable amount of misapprehension existing in the public mind. For many operations in (lie wheat market, even though they involve a good deal nioro than buying or selling for the satisfaction of economic needs, liavo i-ome to be accepted as a natural and necessary factor in the distribution of xvheat and the regulation of its price. Take, for instance, the ordinary practice of dealing in "futures," as described by one of our leading economists. A British miller, having ordered a certain quantity of xvheat, tries to insure himself against loss on the sale of his flour by contracting to sell an equal quantity of standard wheat, at a future, date, delivery to be given nbottt the time, that his oxvn flour xvill be going on the market. If xvheat- falls in the interval his flour xvill have to compete with that made from cheaper xvheat. But. what be loses on bis flour be xvill gain on the xvheat that he has told "forward" at current rates, and will then be able, to supply at the lower price level. 0b

tlie other hand, if wheat rieee before he liu.s to deliver the amount be has con- 1 tmetod to supply, he will gain >■ his . flour just about as much as he will , lose in purchasing t.he wheat that he I has contracted to deliver. The wheat < operator holds thnt in so doitip: he bus ' not speculated, but merely insured himnelf against loss. This is in one. eenae strictly I rue, but it is also undeniable ( that dealing in "futures" may become 1 highly speculative, especially when the I -bulls" and the "bears' , am in conflict., ' and those who have Bold "forward" arc "caught short" and forced to pay high , prince to complete their contracts. The i whole problem of wheal prices is an ' exceedingly complex one, and though it ' may eocni desirable that the State should protect, the public n gains I. the speculative operator in wheat stocks, it doe-s not seem that governments can ever hope to control wheat prices in the public interest unless they can (succeed in regulating the demand as well as the supply.