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98 Economics in One LessonThere are several methods by which it is commonly proposed todo this. One of the most frequent is government loans to farmers toenable them to hold their crops off the market.Such loans are urged in Congress for reasons that seem very plausibleto most listeners. They are told that the farmers’ crops are alldumped on the market at once, at harvest time; that this is preciselythe time when prices are lowest, and that speculators take advantageof this to buy the crops themselves and hold them for higher priceswhen food gets scarcer again. Thus it is urged that the farmers suffer,and that they, rather than the speculators, should get the advantage ofthe higher average price.This argument is not supported by either theory or experience.The much-reviled speculators are not the enemy of the farmer; theyare essential to his best welfare. The risks of fluctuating farm pricesmust be borne by somebody; they have in fact been borne in moderntimes chiefly by the professional speculators. In general, the morecompetently the latter act in their own interest as speculators, themore they help the farmer. For speculators serve their own interestprecisely in proportion to their ability to foresee future prices. But themore accurately they foresee future prices the less violent or extremeare the fluctuations in prices.Even if farmers had to dump their whole crop of wheat on themarket in a single month of the year, therefore, the price in thatmonth would not necessarily be below the price at any other month(apart from an allowance for the costs of storage). For speculators, inthe hope of making a profit, would do most of their buying at thattime. They would keep on buying until the price rose to a point wherethey saw no further opportunity of future profit. They would sellwhenever they thought there was a prospect of future loss. The resultwould be to stabilize the price of farm commodities the year round.It is precisely because a professional class of speculators exists totake these risks that farmers and millers do not need to take them.The latter can protect themselves through the markets. Under normalconditions, therefore, when speculators are doing their job well, the