ARTICLE IV.—THE ETHICS OF SPECULATION.

THE moral character of speculation is seldom called in question. Although a certain stigma is often attached to the term "speculator," and the general public looks askance at the wholesale transactions in the Exchanges and on Wall street, it is not from any moral disapproval of the practice in itself considered, but rather from personal aversion to individuals who have acquired wealth by this means, and the particular methods which they have employed. Ordinary speculation is sanctioned by law and by the popular conscience. It is accounted as honorable as productive trade, and few persons would be restrained by conscientious scruples from sharing in its profits. As a consequence speculation has come to be recognized as a respectable profession when not accompanied by overt dishonesty. In every community we may find men who gain a livelihood by speculation alone. Besides these are very many representatives from every class of society and every real or imaginable profession who invest a part of their surplus earnings in this form of trade. While they continue to devote their chief attention and energy to some productive calling, whether it be the law, or husbandry, or preaching the Gospel, or measuring cloth, as often as they can spare a few dollars, they put it into margins or stocks, or buy a few lots of land in some growing town, or enter the Board of Trade.

A very few out of the vast number who thus invest are successful; and these usually give up their legitimate toil and turn their whole attention to speculation. Others, and many more in number, simply lose what they invest in this way. Still others, being threatened with loss, constantly add to their unprofitable investment with the hope of saving what they have already invested and thus involve their whole business in ruin, or making use of funds not their own become entangled in hopeless defalcation. It is a fact worthy of notice that the majority of our defaulters have been drawn into dishonesty by unsuccessful speculation. With results, however, we have

nothing to do in the present discussion. We are only concerned with the fact that the practice of speculation in some form is well nigh universal. Men who pride themselves on their strict honesty, who would not intentionally wrong their fellow men, and who would be ashamed to buy a lottery ticket or stake their money at the gaming table, have no conscientious scruples against speculation.

Few persons distinguish between legal and moral right; and in this land there is a tendency to submit all questions to the dictum of the majority. We must remember, however, that questions of right and wrong cannot be decided by a show of hands or weight of authority. These standards are very uncertain and changeful. Popular opinion in ancient Sparta declared theft to be a virtue, and the same authority in Judea branded Divine goodness a crime. But notwithstanding all the changes of public sentiment, the eternal principles of right and truth have remained the same, and the moral character of every practice or institution must be determined by these alone.

When weighed in the balances of eternal justice, speculation is found wanting. Its character will not stand the supreme test. It is a moral wrong. It is in its essential nature opposed to all accepted ethical standards. It stultifies the fundamental principles of right which must underlie all permanent social relations. The speculator is a thief from society. He is a parasite, living only as he sucks the life blood of another. He is a public malefactor, having no claim to a place in the ranks of honest trade.

The business of the speculator has not grown up out of any real or fancied need of society. It is the result of unmitigated selfishness, the reckless haste to be rich. The possibility of acquiring wealth has begotten an intense desire for wealth. The "mushroom" fortunes so common in a new country have become a snare to the people, and almost every young person cherishes the feverish hope that through some happy circumstance wealth will come to him much more quickly than it can be earned by ordinary and natural methods. In a land like ours there is much to foster this hope. Our resources are enormous in comparison with our population and they are as yet very imperfectly developed. In them lie untold possibilities of

wealth. The discovery of a mine has made many a poor man rich in a day. Petroleum wells have accomplished the same result. Useful inventions have poured money into the pockets of men who were wise enough and fortunate enough to take advantage of the patent laws. The unusual demands created by the late war were a means of bringing wealth to not a few. And so it has often happened that men of no extraordinary ability have, by seizing some great opportunity, leaped at one bound from poverty to luxury in a most unexpected manner and without unusual exertion on their own part.

Whenever a fortune is thus suddenly acquired the spirit of emulation is aroused. Hundreds of onlookers become dissatisfied with the ordinary, slow processes of acquisition. The industry, the unremitting toil, the constant care, and the patient waiting necessary to gain even a moderate competence are scorned in view of the chance to make a fortune in a day. The question arises in every mind-"One man has done it, why may not all do the same?" With the question comes the determination. In their eagerness they entirely forget the important relation of quid pro quo, and see only the fortune acquired without labor or waiting. If natural opportunities for acquisition are wanting, they create artificial opportunities. If they cannot make themselves rich by enriching others, they will do it by impoverishing others. In other words-they speculate.

Wealth is legitimately gained only by means of production in some form. The discoverer of a mine or of an oil well brings within the reach of men vast stores of wealth which were before unknown and therefore useless; hence he is in reality a great producer and the fortune which he acquires is only a fair return to him for the increase of wealth which he has given to the world. The inventor has become an indirect producer by increasing the producing power of others, if his invention has any real value; hence he also receives only a just return for what he has given to men. The inventor of the mowing machine immeasurably increased the productive power of agricultural laborers, and thus fairly earned all the wealth he may have derived from his invention. The same element of productiveness underlies all legitimate trade. A farmer in the west raises ten thousand bushels of corn. If he finds no market

for it, the greater portion must go to waste. But if another man buys nine thousand bushels and carries it to eastern consumers, he has become a producer as really as though he had himself raised nine thousand bushels of corn. The railroad men and all who took a necessary part in conveying the corn from its original producer to the consumer are indirectly producers, for although of themselves they have produced nothing, they have saved the production of the farmer from perishing and thus being lost to the world. The man who actually buys railroad stocks as a permanent investment becomes a partial owner of the road and the profit which he derives from its regular dividends is legitimate gain, since he makes an equivalent return to society in the productive work of the road. In this way the labor of merchants, bankers and countless other classes of society is accounted productive because it forms a necessary link between producer and consumer and thus adds to the wealth of the world. The result of all truly productive labor is to increase the aggregate wealth of society, and any labor that does not increase or save from loss either the actual wealth or the wealth-producing power of mankind is not in any sense productive. Speculation does neither, but only consumes the wealth of society without replacing a dollar.

Again, all legitimate trade is based upon a voluntary exchange of equal values. This implies first of all that both of the immediate parties to the exchange shall derive an equal advantage from it. This is not all, however, for many exchanges affect not the immediate parties alone, but the community as a whole; and it is just as essential that we leave the treasury of society undisturbed as it is that we deal honestly with a single individual.

A man may derive large profits from purely speculative trade while the individual with whom he trades apparently loses nothing. In fact there may be an extended circle of speculative trade in which all parties directly concerned seem to be about equally profited. This is often the case in land speculation. One individual may buy a lot of land at a moderate price and sell it almost immediately at a great advance. The buyer may sell again also at an advance; and so the selling may continue till one buys it at a high price for permanent pos

session, and even the last buyer may feel perfectly satisfied with his bargain, for he may still use the land profitably. There has been no loss but rather a direct gain to each individual having a part in the complex transaction, but in every such case society at large is the loser.

Speculation knows no law of fair or equal exchange. It is not exchange at all. It is merely disguised and legalized robbery. Its working is wholly in one direction. On one side it is all gain; on the other side it is all loss. Every dollar that the speculator gains represents a dollar or more of loss to someone, it may be to the other parties directly concerned in the transaction, it may be to others indirectly concerned, it may be the entire community.

The paper contracts of the Exchanges are perhaps the most extensive of all speculative transactions. These contracts represent no exchange whatever. They are wholly independent of the element of production. Their fulfilment implies merely the payment of a certain sum of money from one speculator to another for which nothing is given in return. The money may go in either direction with equal propriety, since it is wholly unearned. The direction in which it goes is arbitrarily determined by the fluctuations of the market.

The same is true of stock speculation. So far as the principle is concerned it makes no difference whether speculation is in whole stocks or in margins. The broker who buys a thousand shares of stock in some good railway at par and sells them a week later at five per cent. advance because of a forced rise in the market has no moral right to the profit received. The real value of the stock as represented by the condition and traffic of the railroad remains unchanged. He has not earned the money thus gained. If he has derived a profit of five thousand dollars someone has lost just five thousand dollars plus the waste which inevitably accompanies all such transactions. Again, if I place five hundred dollars in the hands of a broker to be invested in margins, when the transaction is closed if I find that I have gained a hundred dollars, then I know that someone has lost a hundred dollars in addition to various brokers' fees and other expenses. When the Bulls and Bears have a skirmish on Wall street and the victors win a million