National Affairs: Hoover on Shorts

Whenever during recent months the price of wheat has slumped lower, the Federal Farm Board has charged that grain speculators were manipulating the market to discredit the Board's efforts to help the farmer. When fortnight ago Vice President Curtis and Senator Watson begged the Board to hold its 200.000,000 bu. off the market long enough for prices to rise, Board officials obliquely declared that such requests were inspired by avaricious wheat traders plotting to rob the farmer. Few persons appeared to heed these vague accusations. But last week the Farm Board took them to the White House, got President Hoover to broadcast them.

To the Press President Hoover read this statement: "It has come to my knowledge that certain persons are selling short in our commodity markets, particularly in wheat. ... I do not refer to the ordinary hedging transactions [nor] to the legitimate grain trade. I refer to a limited number of speculators. ... In these times this activity has a public interest. It has but one purpose and that is to depress prices. It tends to destroy returning public confidence. ... It deprives many farmers of their rightful income.

"If these gentlemen have that sense of patriotism which outruns immediate profit, and a desire to see the country recover, they will close up these transactions and desist from their manipulations. The confidence imposed upon me by law as a public official does not permit me to expose their names to the public. Otherwise I would gladly do so."

But President Hoover, so often unlucky, picked a bad day in which to flay short wheat speculators as the cause of depressed prices. Almost at the same hour the Department of Agriculture was distributing its July 1 wheat crop estimate. This year's anticipated harvest was set at 869,013,000 bu., an increase of 5.583,000 bu. over last year's bumper crop. Such harvests stack one surplus on top of another, send prices down correspondingly. Acreage which the Farm Board has been pleading with growers to reduce 20% was cut less than 5%. While flaying short- sellers, President Hoover made no reference to the stubborn refusal of farmers to plant less grain.

The President's words created a temporary political pother. There was talk of legislation to outlaw short selling, altogether. Short-sellers were anonymously but importantly condemned as "hyenas" and "crocodiles." Somebody told the President that shorts were prepared to hammer wheat prices down to 20¢ per bu.

In the grain trade proper, the President's statement brought forth only flat denials. The heads of the Chicago Board of Trade and the Minneapolis Chamber of Commerce asserted their records showed no excessive short trading. Wheat traders attributed low prices to these three factors: 1) the 200,000,000 bu. the Farm Board was still holding over the market; 2) this year's bumper crop, with its conse quent surplus, as reported by the Department of Agriculture; 3) reduced wheat consumption throughout the world because of hard times. Oldtime traders compared the President's outburst to the Secretary of Agriculture's political scare last year about short wheat sales by U. S. S. R. (TIME, Sept. 30 et seq.). Wheat men were of the opinion that prices were too low now for shorts to operate with any expectation of success.