We’re finishing Chapter Two today, and this is where Graham finally stops circling and tells you what he actually thinks.
He walks through Hoover, then Roosevelt, and the difference isn’t ideology or intelligence, it’s timing. Hoover loans were made early, into worsening conditions. Roosevelt loans were made later, at lower prices, when the cycle was about to turn. Same tools. Different moment. And suddenly one looks like failure and the other looks like success.
That alone should tell you something.
Graham then does what he does best. He steps back and says, let’s stop arguing and draw conclusions.
And the conclusions are uncomfortable because they don’t flatter anyone.
First: whenever surplus has been conserved for future use, it has generally worked. Not perfectly, not magically, but sensibly. Unless it was ruined by bad administration, it did what it was supposed to do.
Second: whenever surplus has been acquired for future sale, the whole thing becomes fragile. Now you need luck. Now you need perfect management. Now you’re exposed to price swings, politics, dumping, retaliation, and timing errors.
And this is the pivot.
Graham is quietly telling you that money is not the answer.
Utility is.
Use is.
The highest and best use of a resource is what matters, not the profit factor in isolation. When governments—or producers—treat surplus as something to be flipped for a better price, they are speculating. When they treat surplus as something to be stored and mobilized later for actual need, they are stabilizing.
Intent matters.
That’s the key distinction.
A reserve built for drought or war is not the same thing as a stockpile built to goose prices. Even if both involve buying and selling, the sale is only a means to bring the resource back into use, not the end goal.
When surplus is dumped abroad, when it’s sold not for use but to unload inventory or protect margins, Graham calls it what it is: commodity speculation carried out by the state.
And here’s the trap.
Governments tend to intervene early in price declines. That support encourages more production at exactly the wrong time. The market needs retrenchment, and policy produces expansion. The surplus grows. The problem compounds.
Graham is fair. He says state intervention isn’t always disastrous. That would be too simple. But intervention aimed solely at maintaining price is usually ill-timed and unsuccessful.
Which is why he repeats his conclusions again, this time adding a third.
One: state activity in the face of surplus is inevitable.
Two: restriction will never be accepted as a permanent solution.
Three—and this is the new one—the proper aim must be conservation of surplus for future use, not price maintenance.
And then he does something important.
He doesn’t pretend the solution is easy.
If it were simple, it would already be universal.
The real question, and the one Chapter Three is going to tackle, is whether there’s a feasible mechanism that can mobilize surplus when it appears, release it when it’s needed, and do so in a way that is self-financing and self-liquidating.
That’s the bar.
Not ideology.
Not politics.
Not profit.
Use.
That’s where we’re headed next
