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Monday, July 30, 2012


Foundation of Economic Education


  Charles W. Williams

  Important events in the exciting history of food have interesting, divergent, and often accidental beginnings.

  In 1856 a boy in Pittsburgh grew some extra horseradish in his mother’s garden. He borrowed a wheelbarrow, which he filled with bottles of ground horseradish and sold to local grocers. The boy was Henry Heinz; and from this first bottle of horseradish sauce grew the intricate world-wide business of the H. J. Heinz Company. Before 1900 that one variety had grown to 57, which today numbers close to 570 in this far-flung food empire.

  In 1904 Thomas Sullivan, a tea merchant, sent samples of his various blends of tea to a few of his customers packed in little, hand-sewn silk bags. To his amazement, orders began pouring in by the hundreds for his tea put up in bags. His customers had discovered that tea could be made quickly without muss or fuss by pouring boiling water over tea bags in cups. Thus, quite by accident, was the start of a million-dollar innovation in the sale of tea.

  In 1890 a salesman living in Johnstown, New York, while watching the time it took his wife to make some calf’s-foot jelly, decided that powdering gelatin would save a lot of time in the kitchen. Charles B. Knox put his idea into operation, hired salesmen to go into peoples’ homes to show how easily his gelatin could be dissolved in water and used. His wife worked out recipes for aspics and desserts to be given away with each package. This was the beginning of Knox Gelatine known today by every American housewife.

  Peter Cooper, the inventor of the ‘‘Tom Thumb” locomotives, also invented a process for mixing powdered gelatin, sugar, and fruit flavors. This was fifty years before it began to appear on grocers’ shelves as Jell-O. He was too early; merchandising methods had not been developed to convince housewives of the need for ready prepared foods. Just before the beginning of this century spectacular advertising for its day pointed out how many desserts could be prepared from this inexpensive, neat, clean package of Jell-O. Recipe booklets were distributed by the millions, as many as 15 million in one year, unheard of in that day. Another billion-dollar food business was launched.

  Count Rumford, born in Massachusetts, who later migrated to England, was a leading physicist of the nineteenth century. He built the first kitchen range designed for use in a prison in Munich. This proved so efficient and workable that many wealthy people commissioned Count Rumford to replace their open hearth type of cooking apparatus with these new contraptions in their manor kitchens. By 1850 many American manufacturers had adapted Rum-ford’s invention and were producing cast iron ranges in many sizes and shapes, lavishly decorated. From an experimental prison range, the modem stove industry was born.

  In 1914 a young scientist from Brooklyn, New York, named Clarence Birdseye joined a scientific expedition to Labrador. He was also an avid sportsman, so he lost no time. He cut a hole in the thick arctic ice to try his hand at fishing. The fish froze as soon as they Were exposed to the subfreezing air, often before he had them off the hook. To his surprise, the fish could be kept frozen for weeks and then defrosted and cooked like a fresh fish without any loss of texture or flavor. After returning to the United States, Birdseye made the same discovery while hunting caribou. The steaks from the quick-frozen caribou could later be broiled to a juicy, flavorsome rareness. Because of World War

  I, he had to drop many additional experiments in quick-freezing all kinds of food. After the war he went into the fishery business in Gloucester, Massachusetts, and experimented with fast freezing on the side. With a tremendous amount of good salesmanship, he raised money for the first quick-frozen food company. The first Birdseye package went on sale to the public in 1930. It would have been difficult to believe, at that time, that within a relatively few years almost every segment of our giant American food industry would be in quick freezing.

  In Boston in 1894 a boardinghouse keeper was criticized by a sailor in her rooming house because her puddings were lumpy. Insulted at first, she became interested when he explained that the South Sea island natives pounded tapioca to a smooth consistency and suggested that she experiment by running some through her coffee grinder. Sure enough from there on her puddings were as smooth as silk. Soon she was putting up her finely ground tapioca in bags and selling them to her neighbors. She chose a very magic name—“Minute Tapioca”—and soon found a big business on her hands. Many quickly prepared foods have since copied the word “minute,” but today a minute does not seem fast enough and has been replaced by “instant.”

  Many people believe Aunt Jemima to be a fictional name representing an old-fashioned Negro mammy. On the contrary, the name of this ever-popu-lar pancake mix was inspired by a real, live person. A widow who lost all her money and could no longer pay wages to the faithful old family cook worked out a formula with her real-life Aunt Jemima and managed to borrow enough money so they could jointly put their product on the market. The mix brought fame and fortune to the real Aunt Jemima and her former penniless mistress.

  Chiffon cake was billed in huge cake mix ads in the 1940’s as the “first really new cake in a hundred years.” Harry Baker was a professional baker and owned a pastry shop in Hollywood, California. For years celebrities had flocked to his store and raved about his cakes. Many cooks feel that their personal recipes should be very valuable to some big food manufacturer but are shocked to find that variations of nearly every recipe have already been tried in the research kitchens. Harry Baker was one of the lucky ones; he sold his recipes for many thousands of dollars to General Mills. The valuable secret of his chiffon cake was that instead of shortening he used salad oil.

  Going back many years to 1520, Cortez, the Spanish conqueror of Mexico, observed native Mayan Indians treating tough meat with the juice of the papaya, a common fruit in most tropical lands. He noted this in his writings about his conquest. Strangely enough, this find lay dormant until recent years, when the tenderizing element in papayas was turned into a powder, put up in jars ready to sprinkle on the surface of meat to make chuck and round steaks as tender as sirloin and porterhouse. From this long-forgotten idea came Adolph’s Meat Tenderizer, a necessity in many homes.

  In 1824 a German doctor living in Venezuela had a Spanish wife who had been sickly for years. Determined to cure her, he worked for over a year on a formula of herbs and spices until he invented a tonic that he claimed brought her back to health. Sailors stopping at the little port of Angostura found that this blend of herbs, spices, and the blossoms of the blue Gentian plant would cure seasickness. They spread the fame of Angostura bitters around the world, the process being speeded when they learned to add it to their ration of rum. When it became an essential part of a Manhattan cocktail, its place in our lives was further assured. Later, it was found to be an excellent addition in many food recipes, and today Angostura Bitters is found on almost everyone’s food shelf.

  Early traveling merchants from the city of Hamburg, Germany, learned from the Tartars in the Baltic Sea area how to scrape raw meat, season it with salt, pepper, and onion juice to make what is still called tartar steak. The people of Hamburg soon adopted the tartar steak. After many years some unknown Hamburg cook made patties out of the raw meat and broiled them brown on the outside and still pretty raw on the inside—a true hamburger. Today in the butcher shops of America, ground hamburger meat accounts for 30 per cent of all the beef sold to consumers.

  The Toll House was a country inn in Massachusetts noted for good food. In the early 1940’s Ruth Wakefield, who was then mistress of the inn, started serving a crisp little cookie studded with bits of chocolate. Miss Wakefield readily gave her customers the recipe, and all of a sudden, bars of semi-sweet chocolate began vanishing from the shelves of the stores in the area. It didn’t take long for the Nestle Company, and later Hershey, to smoke out the fact that everyone was making the cookie recipe from the Toll House; and soon they were selling millions of packages of chocolate bits specifically so people could make these wonderful cookies. Today it is America’s most popular cookie, available frozen, in ready-to-use cookie mixes, and already made in packages.

  The early Chinese found that seaweed dried and ground into a powder and added like salt to food had a magical effect on meats and vegetables—all their natural flavor was enhanced. That’s why Chinese food became so popular all over the world. Eventually our chemists discovered the flavor-enhancing element and called it glutamate. Today this product, monosodium glutamate, made from beet sugar waste, soy beans, or wheat, is a staple item in every market. It is known to American shoppers as Ac’cent.

  Gail Borden, the son of a frontiersman, went to London in 1852 to sell a dehydrated meat biscuit at the International Exposition being held in England. He used all his money trying to put over his idea and had to travel steerage to get home. He was appalled at the crowded, miserable conditions imposed on the immigrant families coming to America. During the trip several infants died in their mothers’ arms from milk from infected cows, which were carried on board most passenger vessels to furnish milk, cream, and butter for the passengers. Borden was sure there was a way to preserve milk for long voyages; but many before him had tried and failed, including Pasteur. After four years of intensive research, Borden perfected a process of condensing milk. In 1856 his patent was approved in Washington. After much work selling the idea to skeptics, the first canned milk was introduced to the American market and formed the cornerstone of the vast and diversified Borden Company.

  In Battle Creek, Michigan, Ellen Gould White had a dream one night in which she was told by the

  Lord that man should eat no meat, use no tobacco, tea, coffee, or alcoholic beverages. As a Seventh Day Adventist she established the “Health Reform Institute,” a sort of sanitarium, where her guests ate nuts disguised as meat and drank a cereal beverage. This beverage was the creation of one of her guests named Charles William Post, who was suffering from ulcers. He named his beverage Postum. Post also invented the first dry breakfast cereal, which he called “Elijah’s Manna.” He decided to go into business producing his inventions; but the name Elijah’s Manna ran into consumer resistance, so he changed it to “Grape Nuts.”

  In this same sanitarium was a surgeon named Dr. Harvey Kellogg, whose name along with Post’s was destined to be on millions of cereal packages every year. One of Dr. Kellogg’s patients had broken her false teeth on a piece of zwiebach, so he invented a paper-thin flake cereal from com. Breakfast cereals immediately became a rage, and at one time there were as many as forty different companies in Battle Creek competing for this new health food business. So began the vast cereal business of today.

  Margaret Rudkin was the wife of a stock broker and her son suffered from allergies. She made an old-fashioned loaf of bread from stone-milled whole wheat flour, hoping to build up her son’s health. The bread helped her son; so her doctor persuaded her to bake the bread for some of his patients, and soon she was in business. When this bread was introduced in the thirties, it competed at 25¢ against the spongy white variety selling at 10¢. Within 10 years, Maggie Rudkin’s Pepperidge Farm Bread was in demand all over the East Coast and other bakers were making similar loaves— another small beginning for a nationally-known company, Pepperidge Farms.

  One night Teddy Roosevelt, who had been visiting the home of President Andrew Jackson, stopped for dinner at the Maxwell House, a famous eating place nearby. Roosevelt, a great extrovert, was so delighted with the coffee that when he finished he replaced the cup in the saucer with a formal gesture and cried out heartily, “that was good to the last drop,” a phrase destined to make quite famous the coffee named after the Maxwell House.

  St. Louis, Missouri, was the site of two important developments in the realm of food. In 1904 an Englishman was tending a booth at the St. Louis International Exposition demonstrating the virtues of a hot cup of tea. This was an insurmountable task during the hot July days in the Mid-West. Our Englishman, Richard Blechynden, disparagingly wiped the perspiration from his face as he watched the crowds pass him by. Finally, in desperation, he threw some ice into the hot tea urn and the crowds began to swarm around his booth. The drink was a sensation, and iced tea quickly became one of America’s most popular thirst quenchers.

  Still in St. Louis, but back in 1890, a physician ground and pounded peanuts to provide an easily-digested form of protein for his patients. The result was peanut butter, which was quickly and rightly adopted by food faddists all over the country. Today it is a staple found in almost every American kitchen. It’s a rare mother who isn’t thankful for healthful peanut butter when nothing else seems to tempt her children’s appetites.

  So, with these ancedotes, one can see that almost every great food company or food idea had a small but fascinating beginning. Some came quite by accident, others from diligent perseverance, reflecting the drive and ingenuity of the human race—free enterprise among free men.

  Of all aspects of the free market economic system, the role of profit-making by individuals is the one most subject to controversy. An air of apology seems to permeate any discussion of profit-making, even among those who generally commend the market society.


  Percy L. Greaves, Jr.

  Back in February, 1871, a group of free enterprisers found a way to help cotton growers adjust their production to market demand. They organized the New Orleans Cotton Exchange. There, for 93 years, cotton growers, wholesalers, manufacturers, and profit-seeking speculators could buy and sell cotton at free market prices for present and future delivery.

  The prices paid and offered were published in the press. No cotton grower or user was long in doubt about the state of the cotton market, present or future. For there is no better indicator of the state of a commodity market than the prices at which that commodity is bought and sold for various dates of delivery.

  The prices of the New Orleans Cotton Exchange were long a valuable guide for farmers and manufacturers alike. For farmers, they indicated how much land should be planted in cotton and how much in other crops. Through the growing season, future prices indicated how much time, care, and expense should be spent in tending crops. When future prices were high, no expense was spared to bring every possible ounce to market. When future prices were low, farmers were warned not to waste too much time and expense cultivating and picking that last possible ounce.

  For manufacturers and other cotton buyers, the Cotton Exchange quotations provided a base for estimating or determining their future raw material costs. This in turn helped them calculate the prices on which they bid for future business. On orders accepted for delivery over long periods of time, they could always make sure of their raw material costs by immediately buying contracts for delivery of cotton on the dates they would need it.

  Cotton Prices Controlled

  On July 9, 1964, the New Orleans Cotton Exchange closed its doors to trading in “cotton futures,” as contracts for future delivery are known. For years such sales have been fading away. With cotton prices more and more controlled by the government, neither farmers nor manufacturers need the information or insurance of a futures market.

  When demand for cotton drops off, the government advances the subsidized price to farmers and stores all unsold cotton. When demand for cotton rises, cotton pours out of government subsidized warehouses and sells at the government set price. Either way, the taxpayers lose. Until present laws change or break down, cotton prices will be set by the government, cotton acreage will be guided by bureaucrats, and valuable men, materials, and tax money will continue to be wasted in nonproductive enterprise.

  This situation reflects a complete lack of understanding of the rules of human behavior and the role of speculators in a free market society. It substitutes the wisdom of a few striving to stay in political power for the wisdom of those who spend their lives studying every facet of supply and demand before pledging their names and fortunes in support of their considered judgment.

  It is human nature for men to try to improve their future conditions. That is the aim of every conscious human action. Men make mistakes, but they always aim at success in providing a better future for themselves or their loved ones. Free market transactions are merely the attempts of men to improve their own situations by social actions which also improve the situation of others. Barring force, fraud, or human error, all voluntary market transactions must improve the situations of all participants.

  How Men Act

  Actually, there are only three basic principles of human action. Men can act as gamblers, scientists, or speculators. Few acts fall entirely within any one classification. For every human action is confronted by elements of future uncertainty, such as those that exist in life itself.

  Men act as gamblers when they know nothing in advance about the results except that some will win and others lose. There is nothing a man can know, study, learn, or experience that will help him to become a winner. When men gamble, the desired results depend upon pure chance. No skill whatsoever is involved.

  Men act as scientists when they know in advance the results their actions will produce. Scientists deal only with solvable problems where conditions can be controlled and where identical actions in identical situations will always produce identical results. Automation is a modem example of scientifically directed action. In all scientific action, the repetition of prescribed procedure will always produce the same results. So, the more that scientists know about the laws of nature, the more they can undertake with prior certainty as to the actual results.

  Men act as speculators when they have only partial knowledge and understanding of the results their actions are likely to produce. The more speculators know and understand, the better they can predict the future results of their actions. But they never can be certain of the actual results.

  Most speculations involve people and how they will react to given situations. Since we can never know with certainty the future reactions of others, every action which involves others is a speculative action. Thus, all voluntary actions, including market actions, are speculative.

  Why Men Specialize

  The best way to increase the probability that speculative actions will produce the desired results is to increase our knowledge and understanding of all pertinent data, including the thoughts and ideas that motivate the actions and reactions of others. This takes time, study, experience, and economic analysis.

  Men have found that the best way to gain more of the needed knowledge, experience, and understanding is for each one to select some limited area of human activity and then specialize in it. Out of this division-of-labor principle the whole market system has developed. In a market society, everyone specializes and then trades the products of his specialty for the products of other specialists, his partners in total social production.

  This system permits scientists to specialize in the automatic mass production of inanimate objects of wealth with certainty as to the physical results. However, men cannot plan or plot the market value of their products with scientific certainty. All such values are relative and speculative. They depend on the ever-changing ideas of buying men as to which of the many things offered for sale will give them the most satisfaction for the sums they have to spend.

  Specialization can and does help men engaged in marketing and other speculative social actions. It permits them to learn more about what they sell and also more about the needs and wants of those to whom they seek to sell. Thus they become wiser and more efficient speculators, wasting less time trying to sell the wrong things to the wrong people.

  Perfect results depend on the perfect prediction of future conditions. Because of human fallibility, this is rarely possible. However, better predictions and thus better results are often achievable. Greater specialization tends to reduce errors and help men achieve better results.

  Many men prefer the relative security of a reasonably assured steady income to the insecurity of a wholly speculative income—an income that may turn out to be very high, very low, or even a net loss. Such security-seeking people tend to become employees.

  Others prefer the lure and excitement of speculation. Such people are the investors, employers, business promoters, and professional speculators.

  They assume responsibility for the uncertainty of a business venture’s future success or failure. Their likelihood of success depends largely on their ability to predict the future wants of buyers.

  Better Foresight Pays

  In a mass production market economy, the function of prediction and speculation falls primarily on investors, business promoters, and specialists rather than on consumers. When producers seek to act as scientists only, creating wealth by relying on the known laws of the physical sciences, they must find others to undertake the predictions and speculations as to the future conditions of the market.

  Such specialists must estimate, at the time production starts, what consumer demand, competitive supplies, and other market conditions are likely to be at the time of sale. Such speculators then assume the responsibility that the planned production will meet the whims and wishes of consumers. Their income will depend on how correct their early predictions of future conditions prove to be.

  As the division of labor has progressed, men and firms have tried to reduce their predictive and speculative functions to limited areas in which they become specialists with a better understanding than most other men. They concentrate on making or marketing certain goods and, in doing so, pay little attention to the market conditions of other goods, including their raw materials which may come from far-away sources with which they are unfamiliar.

  Of course, the future prices they can get for their finished goods are in part dependent upon the ever-changing prices of the raw materials with which they are made. So, to protect themselves against future price fluctuations in their raw materials, businessmen sometimes engage in “hedging.” By “hedging,” they transfer the hazards resulting from the uncertainty of future prices to professional speculators in those products.

  How Hedging Works

  A good example of “hedging” is the case of the cotton shirt manufacturer. He is a specialist in making and selling shirts. He knows that the selling price of cotton shirts is largely dependent upon the price of raw cotton. He has little time to study the cotton-growing conditions around the world or the other prospective demands on the raw cotton supply. He is fully occupied with his own problems in the shirt business. However, he would like to avoid the consequences of unforeseen changes in the prices of raw cotton.

  Under free market conditions, he can hedge by contracting to sell at current prices raw cotton which he need not buy or deliver until the date he expects to sell the shirts he is making. Then, if the price for shirts has fallen, due to a drop in raw cotton prices, he would buy raw cotton at the lower price to meet his hedging contract. The profit on his raw cotton transaction would offset his loss on the shirts.

  On the other hand, if the prices of both raw cotton and cotton shirts have risen, the extra profits from his shirt sales will be offset by his losses on the hedging transaction in raw cotton. By hedging he can protect himself against all possible fluctuations in raw cotton prices which might affect the prices of the shirts he sells. He rids his mind of this worry so that he can concentrate on the details of the shirt business at which he is a specialist.

  The man who takes his hedge is usually a professional cotton speculator. He is a specialist who studies and interprets all the available data and conditions that are likely to affect future raw cotton prices. He trades in cotton a thousand times for every once or twice by the average cotton manufacturer. He knows how much has been planted in the many cotton-growing countries. He studies the rainfall and other weather conditions which may affect the size of the various crops. He keeps up-to-date on laws and proposed laws that may affect raw cotton prices. He follows the ups and downs in foreign exchange and transportation costs.

  He also keeps an eye open for changes in demand for each type of cotton. He has informed ideas about increased demands arising from new uses for cotton, as well as any decreases due to the substitution of synthetics. He watches developments in mass purchasing power, production, and consumption in faraway lands like India. In short, he learns all he can about anything that might affect the supply of, or demand for, cotton and thus bring about a change in future raw cotton prices.

  As a well-informed specialist, the speculator is much better able to predict future cotton prices than is the man who specializes in growing cotton or manufacturing cotton shirts. Competition among speculators trading on a commodity exchange forces them to share the benefits of their knowledge with their customers.

  Businessmen can protect themselves from some speculative losses by taking out insurance. However, customary insurance can only be bought for risks which are largely known or predictable. Losses from fire, death, theft, or transportation accidents are thus distributed over all those insured, instead of falling entirely on the ones who suffer a specific disaster. Future price changes do not fall in this category. They are the same for everyone. Only the well-informed specialist is equipped to speculate successfully and “insure” others against losses from price changes.

  In popular thinking, the speculator is a bold, bad man who makes money at the expense of others. Many people believe he gains his livelihood by luck, gambling, or inside manipulation. There are, of course, a few dishonest speculators who lie and cheat, as do some in all occupations, but the honest speculator is a serious specialist who serves mankind. He constantly strives to obtain a better understanding of future market conditions. He then places this better understanding at the service of all interested parties. Whenever his predictions are wrong, it is he who loses. When he is right, he and everyone who trades with him benefit. For if they did not expect to benefit, they would not trade with him.

  The service of a speculator is to smooth out some of the gaps between supply and demand and some of the extreme ups and downs in prices. He tries to buy when and where a commodity is plentiful and the price is low and to sell when and where the commodity is in short supply and the price is high. When he does this wisely and successfully, he tends to raise extremely low prices and reduce extremely high prices.

  Frequently, the speculator is the first to foresee a future scarcity. When he does, he buys while prices are still low. His buying bids up prices, and consumption is thus more quickly adjusted to future conditions than if no one had foreseen the approaching scarcity. A larger quantity is then stored for future use and serves to reduce the hardships when the shortage becomes evident to all.

  Since a price rise tends to encourage increased production, the sooner prices rise, the sooner new and additional production will be started and become available. So a successful speculator reduces both the time and the intensity of shortages as well as the hardships which always accompany shortages.

  Likewise, speculators are often the first to foresee an increase in future supplies. When they do, they hasten to sell contracts for future delivery. This in turn drives down future prices earlier than would otherwise be the case. This tends to discourage new production that could only be sold at a loss. It also gives manufacturers a better idea of what future prices will actually be. So, here again the speculator tends to smooth out production and consumption to the benefit of all concerned.

  A good example of how speculators serve society was provided in the coffee market a few years ago. A small newspaper item reported a sudden unexpected frost blight in Brazil. Speculators immediately realized that such a frost must have killed large numbers of coffee bushes. This meant much smaller future supplies for the United States. So the speculators promptly bought all the coffee they could below the price they thought would prevail when consumers became fully aware of the approaching shortage. This tended to raise coffee prices immediately.

  The effect of this was to reduce consumption and stretch some of the existing supply into the shortage period. It likewise alerted coffee growers in other areas to be more careful in their picking and handling of coffee so that there was less waste. Higher prices encouraged them to get to market every last bean, which at lower prices would not have been worth the trouble. Higher prices also speeded up the planting of new bushes. Since it takes five years for a new coffee bush to bear berries, the sooner new planting was undertaken the shorter the period of shortage.

  The speculators who first acted on this development served every coffee consumer. If these speculators had not driven up prices immediately, consumers would have continued drinking coffee at cheap prices for a time. Then, suddenly, they would have faced a still greater shortage and still higher prices than those that actually prevailed.

  By buying when coffee supplies were still relatively plentiful and selling later when the shortage was known to all, speculators helped to level out the available supply and reduce the extreme height to which prices would otherwise have risen. Speculators make money only when they serve society by better distributing a limited supply over a period of time in such a manner that it gives greater satisfaction to consumers. They thus permit other businessmen and consumers to proceed with greater safety and less speculation in their own actions.

  If a speculator buys a product thinking its price will rise and it later falls, he loses money for the simple reason that he has acted against the general welfare. He has sent out false indicators to producers and consumers alike. That happened just recently in the case of a large sugar importer. The firm bought large quantities of sugar when it was selling at 11¢ a pound. Its purchases were not hedged. In six months or so the price of sugar fell below 5¢ a pound and the importer was forced to file a petition under the National Bankruptcy Act.

  Hedging with a professional speculator would have prevented that loss. Of course, if the speculator had made no better estimate about future sugar prices than the importer did, it might have been the speculator who filed under the bankruptcy law. But as a rule, speculators are the specialists who are best informed on what future prices are likely to be.

  Fruits of Intervention

  When governments set prices, quotas, acreage limits, or other hampering restrictions on the honorable activities of men, they countermand the checks and balances that the free market places on supply and demand. The result is always surpluses and shortages: the former, where producers’ rewards are set too high; the latter, where they are set too low. Where there are surpluses of some things, there will always be shortages of others. For the men and materials subsidized to produce surpluses have been lured from producing those things which free market conditions would indicate that consumers prefer.

  Political interference with free market processes can only burden the taxpayer and weaken the human impulses of free men which tend to bring demand and supply into balance at the point which provides the greatest consumer satisfaction. With the passage of time, each such intervention can only make matters worse. Then, if people still believe the remedy for every economic ill is more intervention, political interventions will increase further until the police state is reached.

  In any such trend toward a police state, the speculators are among the first to be eliminated. They are the specialists who study world-wide markets in order to reduce the uncertainties that face all farmers and businessmen. Without the services of speculators, bottlenecks of production—a symptom of socialism—soon develop.

  Men and materials are then wasted in the production of surpluses. As a result there are ever-increasing shortages in the things people want most but can’t have because the means to produce them have been misdirected by government decree. The recent end to trading in cotton futures on the New Orleans Cotton Exchange is an omen that should make thoughtful men reflect on the road we are now traveling.

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