Max Weber: Selections in Translation

From the point of view of the community at large, there is a more important question than that of whether and how the public can be protected against the consequences of its own gambling mania. This is the question of the influence exerted by the forms of commercial transaction, especially trading in futures, on the way in which the stock exchange discharges its most important function, that of controlling prices. In this respect, too, the advantages and drawbacks of futures trading are almost inseparably mixed. There is no doubt that it performs in a technically perfect manner the function of equalising prices, which is extremely useful and is indeed essential in speculative dealings. In buying cheap in Paris and at the same time selling dear in London, the arbitrageur increases demand in the one place and supply in the other, and so brings about a geographical redistribution of stocks. The speculator, following the harvest, expects a rise in prices in the winter, so buys grain per June; expecting a rise in prices in spring, he sells per June; thus he brings it about that there is in winter a section of those possessing grain who will not now sell it off locally at the low price, but will sell it at the June settlement date at the price which the speculator promises, and so will keep their grain in store until that date arrives.