in their actions by the course of prices
and never tried to manipulate them? The frequency of movement ought to
increase because the market would become more sensitive, but, other
things being equal, the range of movement ought to diminish, and
ultimately the average daily movement also, though at first the latter
might not fall appreciably if, indeed, it did not rise, owing to the
increased frequency of movement. These results would prove beneficial to
the community. May we infer deductively that they have been attained
because of the increase of speculative transactions? By no means, and
for two reasons. In the first place, the public speculates to a large
extent on the cotton exchange, and its speculation (taken as a whole) is
sheer gambling. But, it may be replied, the outsiders, being as a whole
completely ignorant of the forces at work, so that they cannot form
rational anticipations, cannot have any effect either way: by the law of
chance their influences would neutralize one another. This would be so
if people acted independently and without guidance, but actually they
are sometimes misled by published advice and movements in the market
intended to deceive them, and, even when they are not, they watch each
other's attitudes and tend to act as a crowd. The mass becomes unduly
sanguine or weakly surrenders to panic. Hence the law of error does not
apply, and speculation by the public may unsteady prices. Again, dealers
sometimes try to create corners and form powerful syndicates for that
purpose: the dealing syndicate of late years has become a force to be
reckoned with. Many large-scale operations are entered into, not because
prices are relatively high or low, but to make them high or low for
ulterior purposes; i.e. the market is deliberately "bulled or beared."
In consequence of this tampering with the market no certainty can be
felt about the effect even of expert dealing.

Movement of prices.

What, then, we may profitably inquire next, has actually happened to
price movements generally as the market has developed? This question can
readily be answered as regards the past forty years or so, for which
material has been collected, but the reader must bear in mind that if
improvement can be traced it cannot logically be attributed
unhesitatingly to the perfecting of the machinery of speculation,
whereby a larger use has been made of "futures," since many other
economic changes have taken place concomitantly