APPENDIX 
613 
appointed by Governor Hughes of New York, is to afford a continu- 
ous open market for the transactions and thus to diminish the fluctu- 
ations of price. Any attempt to restrict legitimate trading is bound 
to interfere with this steadying influence. Thus the famous prohibi- 
tion of speculation in gold during the Civil War in the United States 
resulted in immensely increased oscillations of price which continued 
until the hasty repeal of the law; and the recent German legislation 
against futures in the wheat market produced an effect the contrary 
of what was anticipated, leading, after the lapse of a decade, to an 
alteration in the law. A tax on produce-exchange transactions would 
tend to have the same kind of effect as an absolute prohibition although 
its efficacy would obviously be far less. In other words, a tax would 
tend to diminish the number of transactions or to restrict the market. 
To this extent it would lead to an increase in oscillations of price. 
But the tax, although paid by the broker, would be charged to the 
principal, whether seller or purchaser, and would not be borne by this 
principal; for as long as he continued to speculate, the gains on the 
larger margins of the fewer transactions would presumably equal the 
fewer gains on the smaller margins of the more frequent transactions. 
The real burden would be borne not by the speculators but by the 
producers or the consumers of the commodity traded in on the produce 
exchange. For the advantages of the relative stability of price due 
to produce speculation inure, as is well recognized, either to the pro- 
ducer or to the consumer, or to both. The price on produce-exchange 
rransactions tends, therefore, to engender consequences which are 
not usually expected. Where, indeed, as is commonly the case, the 
ax is relatively slight, these consequences are almost imperceptible. 
But at all events the tax must not be regarded as one on speculators 
profits. 
“In the case of stock-exchange taxes, the situation is still more 
-omplicated by the fact that we are not dealing so directly with pro- 
jucers and consumers of a taxable commodity. The tax is imposed 
on the transfer of securities, not of ordinarily consumable commod- 
ities. Here again it may be stated that the tax is not, as usually 
imagined, borne either by the brokers or by their immediate principles 
who are trading on margins. For here, as on the produce exchanges, 
any hindrance to the free speculative movement tends to increase the 
Auctuation of prices, and with this widening of the upper and lower 
limits of stock quotations even the so-called traders or room brokers 
in New York, who virtually speculate on their own account, will tend, 
notwithstanding the diminution in transactions, to make as high profits