properly formulated that I know of. The formula given is the proper one to adopt. As the first step in the education of the public it should be adopted, and published, without rhetoric, and without passion, by every body of farmers in the land. By law, the Interstate Commerce Commission has power to prescribe methods of accounting to be followed by railroads in their interstate commerce traffic, and the roads seem generally to comply with it. But there are subjects

upon which the public demands details, which it must insist upon getting. Details of certain expenditures, with a requirement of vouchers, would be more effective in the prevention of improper practices than any other method which could be adopted. The public is entitled to them and should insist upon getting them. Should occasion be found to require it, railroad auditors should be public officials. At any rate, whatever degree of severity and coercion may be found necessary to put the public in possession of the information required for intelligent dealing with railroads, should be relentlessly applied.

No intelligent public opinion can be created to guide farmers or anybody else in formulating specific demands for reform without some knowledge of the facts and principles involved. Of these farmers are now practically ignorant. What, from their reading of inflammatory literature, they believe to be true, is mostly not true, and what they demand is as apt to be unjust as otherwise. They can usually see only their own interests, and will not understand that others, and very likely other farmers, must be considered. I know of but one place where the American farmer can get the information which he needs on this subject, and that is from the Reports of the Interstate and State Railroad Commissions. The Reports of the Interstate Commission from 1887 to date, give complete and impartial discussions of all problems of interstate traffic, and the syllabi of the great number of cases decided give more facts than can be had anywhere else. A set of these may be found in any good public library, and can be collected by granges or individuals. A sufficient inquiry would doubtless result in a republication of these documents,

omitting repetitions.

The citizens of each state can obtain

the reports of their own states.

Farmers, while insisting upon disclosure of all railroad secrets, and fully informing themselves as to what is now known, should work for the strengthening of the Interstate Commerce Commission by the legislation which it has asked for, but which Congress refuses to give, and for the strengthening, in certain directions, of state commissions. In the newer states the railroad commissions are usually objects of public contempt-and this whether honest or dishonest. They are usually expected to accomplish the impossible, and having foolishly accepted office must suffer the consequences. I do not see how a good railroad commissioner can ever be evolved from the tumult of a political convention, but it is a fact that good men are often both nominated and elected to those places. The trouble is apt to be with their mental calibre. They are expected to become advocates, and are not usually able to cope with the intellectual forces against them.

The true functions of a railroad commissioner are not those of an advocate, but of an investigator and judge. A railroad commissioner can not make a freight tariff. He does not know how. Just classifications and rate sheets must be a matter of growth. The railroads must make their own tariffs, and the commissioners must hear complaints, and decide them after due hearing, ordering such changes as may seem just. The decisions once made, and upheld, if contested, by the courts, must be enforced relentlessly, and at all hazards, by the people, whether in favor of the complainants or against them. When decisions are just, as they usually will be, the railroads will, in nearly all cases, promptly comply with them. What the farmer must do, therefore, to secure justice from the railroads, is: First, insist upon finding out and publishing whatever the railroads desire to keep secret. Secondly, study the railroad question from original official documents; no other publications, especially if controversial, are of much value. Third, insist upon strong national and state commissions, with full power and wide discretion in investigation and review. Fourth, get good men into those positions. Fifth, sustain them when they are there.

T

CHAPTER IV.

THE FARMER AND THE SPECULATOR.

HE science of economics recognizes the existence of moral obligations, but does not concern itself with their enforcement. It merely takes account of economic results following their observance or non-observance. That "honesty is the best policy" is an economic, not a moral precept, meaning that in the long run uprightness is most profitable. With the resemblance, if any, of speculation to gambling, or the immorality of that practice, if it be immoral, this work has nothing to do. What I have to consider in this chapter is the economic result to farmers, of speculation, by others than themselves, in the products of the farm.

"Speculation" is the purchase of a commodity not needed by the purchaser for consumption (or for sale to customers in the ordinary course of business), in the expectation that the market price will be higher; or the contracting to deliver at some future time a commodity not owned by the seller, in the expectation that before the maturity of the contract he will be able to purchase for delivery at a price lower than that contracted to be paid to him. The speculator who buys will profit by higher prices, and is interested in promoting them, which he commonly does by the persistent circulation of facts or rumors indicating a scarcity of the commodity. He is called a "bull" from the habit of that animal of tossing things up on his horns. He desires prices to go up. More commonly, of late years, he is called "long of the market," meaning that he has a supply of the commodity in excess of his contracts to sell. Speculators who contract to make future deliveries are called "bears," from the habit of that animal of tearing down things with his claws. They wish prices to go down. More commonly, of late years, they are called "short of the market," meaning that they own less of the commodity than

they have contracted to deliver. They will be compelled to buy, and desire to buy cheaply. They therefore promote low prices by circulating facts and rumors indicating an excess supply of the commodity. "Bulls," or "longs," are speculators for a rise in prices. "Bears," or "shorts," are speculators for a fall in prices.

As speculation is commonly conducted, the speculator for a rise does not actually receive, pay for, and store the commodity which he buys. This, if done on any important, sale, would require far more capital than speculators usually possess, and would also involve the expense of actual delivery, storage, and insurance. He therefore merely contracts that he will receive, at some definite time in the future, a given quantity of the commodity at a price named, the seller contracting to deliver. Although, in these cases, actual delivery is contracted and can be demanded by either party, neither usually expects it to be made. At the maturity of the contract the one who would lose by its literal fulfilment pays to the other the amount of that loss.

A "corner" occurs when the speculators who have contracted to receive the commodity secure control of the entire stock available for delivery at the time and place agreed upon. Those who have contracted to deliver to them can buy for delivery only of those who are to receive it, who set their own price, which is usually the highest which it is estimated that sellers can pay. They do not compel general bankruptcy, since that would defeat their object. When actual and complete control of a commodity has been obtained by the bulls, the bears have no recourse but to accept the situation and settle as best they can. Complete control of any of the most important farm products, like wheat or cotton, is impossible. At most, control can be obtained only of the supplies, which, at reasonable expense, can be delivered at the time and place where the contracts mature. Outside these limits there are always supplies available, and if prices are raised so as to admit of it, these will be purchased and rushed in and tendered for delivery. These additional supplies must be taken and paid for in cash, or those attempting the corner will fail, and

prices at once collapse. In such cases payment of any difference in value is seldom accepted, as the object is to supply the commodity in such quantities that the bulls can not raise the money to pay for it, when, of course, they fail, and the corner is broken in that way. Corners seldom succeed, but every few years some wealthy combination of speculators attempts italmost invariably with disastrous results to themselves. Speculation, however, is continuous in the leading farm products, and the contest between bulls and bears goes on forever. This speculative business is conducted in public, after the manner of an auction. The rooms where the business is transacted are called "exchanges," and at a regular hour on each business. day an official "caller" calls off, one by one, the list of commodities dealt in on that exchange, and pauses for members to offer to buy or sell. None but members are admitted to trade on the exchange, and these must be known to be responsible. Failure to comply with any contract thus made forfeits membership in the exchange. The business is not commonly transacted by the principals to the transaction, who usually do not wish to be known. The actual trading is done by a class of men called "brokers," who receive orders to buy or sell the commodity, taking on deposit a sufficient sum to protect themselves against loss. This deposit is called a "margin." The ordinary fluctuations of leading commodities being small, the deposit of a small margin will enable the speculator to purchase a large quantity of the commodity. The profit to the brokers is their commission on sales and purchases, and it is the custom of many of them to flood the country with circulars tempting men of small means to attempt to get rich suddenly by speculating through them on the exchanges. The order is given, and the deposit made, and notice is at once received that the broker has bought so many bushels of wheat, or barrels of pork, or bales of cotton, for account of the one ordering, the right being reserved to call for more margin should the market require it, in default of which the commodity may be sold. If the market goes right, the new speculator makes money. If it goes wrong, he loses his margin. The broker always protects himself by selling out before the margin is exhausted.