In Thomas Hardy’smasterpiece of a novel written in the 1880s, The Life and Death of the Mayor of Casterbridge,the destinies of the two main characters, the tragic Michael Henchard and the triumphant Donald Farfrae, essentially rested on the outcome of their trading in commodities.
Hardy would have us believe their fates were intertwined with their characters but in speculating on grain prices, the efficient market theorists of today would say both men cast their lot to the random winds of chance. One, Farfrae, got lucky while the other, Henchard, did not. Needless to say, in both cases, todays adherents to the school of buy-and-hold, passive investing would be appalled by their endeavors in this realm.
In the early going, Farfrae was Henchards right-hand man in a thriving grain-dealing business that had made Henchard one of the wealthiest men in Casterbridge as well as its mayor. But Henchard was, as Hardy wrote, a person, who might not inaptly be described as Faust has been described as a vehement gloomy being who had quitted the ways of vulgar men without light to guide him on a better way.
Jealous of Farfraes growing popularity in the town, Henchard dismisses him from his employ, whereupon Farfrae sets up shop in the same trade and shortly emerges as a rival. His commercial aggrandizement seems largely based on an active, short-term trading approach in grain markets. In Farfraes own words (speaking to Lucetta):
Yet I’ve done very well this year. O yes,” he went on with ingenuous enthusiasm. “You see that man with the drab kerseymere coat? I bought largely of him in the autumn when wheat was down, and then afterwards when it rose a little I sold off all I had! It brought only a small profit to me; while the farmers kept theirs, expecting higher figures– yes, though the rats were gnawing the ricks hollow. Just when I sold the markets went lower, and I bought up the corn of those who had been holding back at less price than my first purchases. And then,” cried Farfrae impetuously, his face alight, “I sold it a few weeks after, when it happened to go up again! And so, by contenting mysel’ with small profits frequently repeated, I soon made five hundred pounds–yes!”– (bringing down his hand upon the table, and quite forgetting where he was)–“while the others by keeping theirs in hand made nothing at all!”
When Lucetta spurns Henchard for Farfrae, its the final straw. Henchard sets out to ruin Farfrae financially by outsmarting him in the grain speculation business. He says to his new foreman, Jopp:
“I sometimes think,” he added, “that he [Farfrae] must have some glass that he sees next year in. He has such a knack of making everything bring him fortune.”
“He’s deep beyond all honest men’s discerning, but we must make him shallower. We’ll undersell him, and over-buy him, and so snuff him out” .
The season’s weather seemed to favour their scheme. The time was in the years when the wheat quotations from month to month depended entirely upon the home harvest. A bad harvest, or the prospect of one, would double the price of corn in a few weeks; and the promise of a good yield would lower it as rapidly .
It was June, and the weather was very unfavourable. Casterbridge, being as it were the bell-board on which all the adjacent hamlets and villages sounded their notes, was decidedly dull.
Henchard, supported by Jopp, read a disastrous garnering [harvest], and resolved to base his strategy against Farfrae upon that reading. But before acting, he sought confirmation from a weather prophet. After paying him a crown, Henchard hears the following prediction:
“By the sun, moon, and stars, by the clouds, the winds, the trees, and grass, the candle-flame and swallows, the smell of the herbs; likewise by the cats’ eyes, the ravens, the leeches, the spiders, and the dungmixen, the last fortnight in August will be–rain and tempest.”
The last part was just what Henchard wanted to hear.
The next Saturday Henchard bought grain to such an enormous extent . When his granaries were full to choking all the weather-cocks of Casterbridge creaked and set their faces in another direction . The temperament of the welkin passed from the phlegmatic to the sanguine; an excellent harvest was almost a certainty; and as a consequence prices rushed down .
Henchard had backed bad weather, and apparently lost. He had mistaken the turn of the flood for the turn of the ebb. His dealings had been so extensive that settlement could not long be postponed, and to settle he was obliged to sell off corn that he had bought only a few weeks before at figures higher by many shillings a quarter.
But he had to enter the Casterbridge Bank that day for reasons which had never before sent him there . It was rumoured soon after that much real property as well as vast stores of produce, which had stood in Henchard’s name in the town and neighbourhood, was actually the possession of his bankers.