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tions which their more usual office is to alleviate, yet whenever this happens, the speculators are the greatest losers." Similar statements may be found in the writings of other well known economists. With them I have no dispute; for their meaning is clear to one who reads their works, and the truthfulness of their conclusions is unquestioned. But they use the word speculation in a peculiar sense, quite different from that which Americans attach to it. In fact the meaning of the word has been undergoing a process of evolution during the past half century, so that what our fathers called speculation we should hardly recognize under that title. Some writers make a distinction between "legitimate" and "excessive" speculation; whereas all speculation in the modern sense is excessive.

We must carefully distinguish between the two different senses in which the word speculation is used. When Mr. Mill and economists of his class use the word, they apply it to transactions based upon the actual possession and exchange of the commodities involved. The man who buys up the surplus wheat crop this year that he may profit by the probable shortage next year is a speculator in this sense of the word. So also is the man who buys railroad or bank stocks and holds them till an increase in their value enables him to sell them at a good profit. Speculation in land belongs strictly to this same class, since it implies the actual buying and selling of land. I do not know that there is any form of speculation in land that does not imply a real transfer of ownership.

The form of speculation which prevails most extensively in our country to-day is wholly different from this. It consists in the transfer of paper contracts merely and has little or no foundation in actual exchange of commodities. It is in reality a form of gambling upon the chances of a rise or fall in the price of any commodity and is carried on without reference to real possession. Thousands of young men speculate in stocks who never have money enough at any time to purchase whole shares of any stock. Having scraped together a few dollars they invest in "margins," that is, they deposit with a broker enough money to cover the change in value of a few shares of stock within a limited range. If the stock falls to the limit within the time specified, the depositor loses his money.

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it rises, he wins the amount of increase. In either case he has not owned a single share of stock, and perhaps his broker has not. Similar to this are the methods of speculation in the various exchanges. While a few men really buy and sell wheat, the majority of speculators buy and sell promises. One man makes a contract with another to sell him a million bushels of wheat at a certain price and time. He neither owns nor intends to own any wheat; but when the time comes to fulfill his contract if the price of wheat has risen above the stipulated price he settles with the purchaser by paying the differIf the price has fallen, the purchaser pays him the difference. By far the greater part of the speculation in our land consists in these fictitious or paper trades. For example, the entire cotton crop of the world available for American and European consumption is about seven million bales of four hundred and twenty-five pounds each in a year. The amount of cotton sold in the exchanges is over eighty million bales, having a value of five billion dollars. In this case the ratio of fictitious trades to the real is more than ten to one. When less than seventy million bushels of wheat are received at the New York Exchange, more than nine hundred millions are sold, giving about the same ratio as before. In the year 1882 the entire oil product of the country was twenty-four million barrels, and the amount sold in the Petroleum Exchanges was two billion barrels, showing a ratio of more than eighty dollars of fictitious trade to one dollar of real trade. The same process is repeated with iron and coal and various other extensive products of the country.

Now it does not require any unusual keenness of intellect to distinguish between these different uses of the term speculation. In the writings of the economists already referred to, the word signifies any form of trade involving unusual risks with the expectation of deriving unusual profits. In its modern sense, speculation implies the use of artificial methods to create trade and derive profits independent of the law of supply and demand. The former use of the word is fast becoming obsolete, and well it may, for it is equally indefinite and unsatisfactory. In view of the countless and varied risks in trade, who can say at precisely what point a risk becomes

unusual? Or who can define unusual profits? In our day and land no risk and no profit would be universally recognized as unusual. On the other hand, the use of the term to signify artificial methods of trade and gain is very definite and meets with universal acceptance. It will be seen that this latter definition covers all the speculative transactions described in the preceding pages; whereas the older definition could only be applied to transactions of a wholly different nature which differ from ordinary trade only in the amount of money involved, or in the commodities exchanged.

When Mr. Vanderbilt obtained control of the Harlem Railroad and by his skillful management raised the price of the stock from about twenty per cent. of the par value to over two hundred per cent., the profit derived was natural and legitimate. The increase in the price of stock indicated a corresponding rise in value brought about by the improved condition of the railroad. But when a similar change was produced in the price of other railroad stocks by the combination and manipulation of brokers, while the real value of the stocks remained unchanged, that was speculation. The profits derived represented no benefit conferred upon the public, but were the fruit of artifice and fraud. The man who buys a whole railroad at once is not necessarily a speculator any more than is the grocer who buys a dozen of eggs in the expectation of selling them again at a profit.

It is in its artificial nature that the evil of speculation consists, and whenever this artificial element enters into trade its effect is evil and only evil. It is not a question of legitimate and excessive speculation. Whether little or much, speculation is always injurious in proportion to its extent.

The paper contracts of the various Exchanges already mentioned, involving billions of dollars, imply an actual loss on one side and gain on the other of hundreds of millions. This enormous sum of money does not represent any benefit conferred upon the community, but is absorbed by the fortunate speculators without any return whatever, leaving the country at large so much poorer. Worse than this, real prices everywhere are largely determined, not by the natural law of supply and demand, but by the fictitious prices of speculators. Men

pay for bread, not what it costs to raise the wheat and manufacture and carry it to them, but what can be extorted from them by the tricks and combinations of Exchange gamblers. The variations in the prices of the different necessary commodities as reported in the Exchanges are felt most keenly by the poor laborers of the world. Every transaction of a speculative nature increases the cost of the commodity handled by the amount of profit made.

The commercial history of America abounds with illustrations of the way in which the prices of the most necessary articles are artificially raised and lowered when there has been no real inequality of supply and demand. Corners in wheat, gold, iron, and coal are of frequent occurrence. Thousands of poor people may be starving for want of bread while millions. of bushels of wheat lie stored away in the elevators held to compel a rise in prices. And when the rise comes a few men are made rich by means of the injury they have inflicted upon society. All this is plainly evil.

Again, take the case of speculation in stocks. The man who actually buys a number of shares in some good railway and receives his dividends from the earnings of the road, however large those dividends may be, is deriving profits for which the work of the railroad is an adequate return to society. The benefit is approximately equal to all parties concerned. On the other hand, the man who invests in margins or in stocks and derives a profit from the rise in price which is wholly independent of the real value of the stocks, receives money for which he makes no return to society at large or to the individuals whose loss contributes to his gain. In all such transactions every dollar of gain represents a corresponding dollar of loss on the other side. The almost incredible fortunes that have been amassed in railroad speculation may be accurately measured by the losses of smaller speculators all over the land. Wall Street is the great financial maelstrom into whose vortex. are sucked the wages of many thousands of productive laborers. The movements of that great stock market are analogous to the filling and squeezing of a sponge. The earnings of countless workers all over the land are drawn into speculative trade by the hope of suddenly acquired riches, and when it is well

filled the sponge is quietly squeezed into the pockets of the great speculators, leaving the vast majority of investors to mourn over their losses.

The effect of all speculation of this kind is to increase the inequality in the distribution of wealth, and to drive the extremes of society more widely apart than ever. By speculation as a rule the rich grow richer and the poor poorer. Since speculation depends for its success upon the artificial raising and lowering of prices, it is evident that the rich man who invests millions can exert a much greater influence upon the market than the poor man who invests but a few dollars. The clerk of moderate means who invests ten dollars in margins is wholly at the mercy of the market. He must gain or lose as others shall determine, while a rich neighbor who has bought the same stocks is comparatively independent. When the price of the stock is forced down, those who have expended their little surplus in margins lose all as soon as the fall reaches a given point; but one whose resources are far in advance of his investment can tide over the period of adverse fortune, and by holding his stock for a rise in prices may make a large profit in the end. It is this ceaseless crushing of small investors between their wheels that keeps the great speculators from ruining each other, and fills their pockets amid all the fluctuations of the market.

It is a principle recognized by all true economists that for every dollar which an individual receives from others, he should make an equivalent return. The speculator boldly sets this principle at defiance, and seeks to extort as many dollars as possible from his fellow-men without making any return. The result of speculation is the same as in the case of a lottery or in ordinary gambling; the few are enriched, the many are impoverished.

When we consider that this process is constantly going on, that more than five hundred million dollars are annually transferred from the pockets of producers to the pockets of nonproducers by a method equivalent to gambling with loaded dice, can we wonder at the growing inequalities in our American society? Do we not see in this fact an easy and abundant explanation of some of the problems that meet the social

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