The Portland daily press., 1881-10-26
STOCK SPECULATION.
What 1t Sometimes Costs to Risk
in Blind Chance.
HOW THE VANDERBILTS AND FLOODS
FLEECE THE LAMBS.
The Dangerous Power Of Centralized
Wealth.
Boston Herald Oct. 23.1


Every month or two there is failure re-
ported, and, when the creditors of the bank
rupt meet to get his statement as to liabilities
and assets, they find among the latter the
shares of mining and improvement companies
of various degrees of worthlessness, and among
the former the debts due to sundry stock brok-
ers for accommodations given in speculative
enterprises. 1t is the old story, which has
been repeated over and over again. The mer-
chant thought that, in the stock market, he
saw the chance Of suddenly making money
The temptation was too great to be resisted,
and, without regard to his just business obliga-
tions, he risked, not only his own money, but
the money of those who had trusted him. Con-
sidered as an ethical question, there is not
much difference between this and outright
robbery. A man engaged in legitimate busi-
ness is well aware that those from whom he
purchases on credit would never sell him goods
on time; that the banks would never take his
paper, and his friends would not indorse it, II
he were frankly to say that he proposed using
the money he obtained in buying this, that or
the other stock upon margins, or that he IN
tended using it in stock purchases of any kind.
A failure growing out of such misappropria-
ton cannot be classed in the same category
with business disasters which result from the
failure of others, or from sudden and unfore-
seen changes in the mercantile market. In one
case the creditors may be out of pocket as
much as in the other; but SO their losses might
be equally great if a burglar entered their Oh
fee and broke open and rihed their safe. A
failure due to this species-of speculation has in
it much nearer relationship to this latter
species of plundering than it has to genuine
business collapse. Unfortunately, public opin-
ion does not seem to have rated these viola
tions of trust in the way they deserve. Much
is said about the poor, unfortunate merchants,
as though their losses were something which
they could not have prevented, while the
DECEIVED CREDITORS,
whose confidence has been shamefully abused,
are expected to bear their losses as though it
were an ordinary mercantile mishap. A change
in public sentiment is needed on this subject,
and it is more than probable that we shall wit
ness such revulsion of feeling within four or
five years. In the last three years stock specu-
lation has been INDUCED in by business men in
this country to an unprecedented extent. In
the main most of these operations have been
successful. Any one who will compare the
prices of stocks, as they were quoted in the fall
of 1878, with the quotations as given today, will
see that there has been in the most OF them
an enormous enhancement in value. The only
considerable exception is mining stock, OF
-x~.1 10 late Tn, aone
quence Of this advance, the outside spectators
have been able, as rule, to make money Dy
their ventures, and if they were bank cashiers
and insurance secretaries who misapplied the
money intrusted to their care, or If they were
merchants employing in this way the money
they have borrowed for business purposes,
they have been able to pay back the capital
thus fraudulently employed, without attracting
attention Bnt an ending to this sort OF thing
must come. Stocks cannot go on booming for
ever. Business prosperity runs in waves, and
since 1873 we have been steadily going up to-
ward the crest of the billow, AMI just as GER
tainly, when we reach the highest point, we
must prepare for plunge into the naliow Pc
low 1t would be foolish to attempt to predict
when that time will come. By combination
of circumstances it might be upon us before
tae present year is out, and then again IL may
be delayed for several years. But Wnen the
crisis arrives it may be confidently asserted
that not few persons Will pe taken uhaWaIes. 15
1T is almost always the case that IN panic tne
chief losers are those who are not regularly IN
the business, and hence have not the means OF
detecting in advance those slight warnings
which
PRoGNosrIcATE THE COMING STORM.
When it is found, as it is almost sure to be,
that merchants and others have been using
money that did notbelong to themin stock opera
tions, it is very probable that the magnitude OF
the loss occasioned will produce reyulslon o.
feeling, and that this form of dishonesty Will
receive the very black title that it deserves,
and those who practice it Sheltered, as they
may be, from criminal punishmenD will re-
ceive their merited commercial and social con-
demnation
1t is hardly necessary to enter into protest
against stock speculation per Sc. What has
been said refers wholly TO those who do not
risk their own, but the money which rightfuiiy
belongs to others. If man, unencnmDered Dy
these obligations, wishes to invest in stock
venture, he must, to large extent, Do tne
Judge of his own actions. He may inquire ouI
to his own satisfaction that the stock of a GER
tain railroad company is below the true value
considering its present profits or its future
prospects, and by so arguing, he may purchase
It. in precisely the way he would buy land
which he believed would be enhanced 10
value by the growth in population or by the
carrying out of some municipal Improvement
But it happens in stocks, much oftener than IL
real estate, that the ventures men take are be-
yond their MEANS should results falsuy thell
confident hopes. The railway stocks which
are most frequently made the basis OF specula-
tive sales and purchases, are managed in such
a way that other factors beside the mere mer-
camille prospect of the company enter in to dis
turb the calculation. The stock, for example
of the Union Paalfc railway is worth, intrinsi-
cally. more today than it was three months
ago; but none the less, it is selling at from Slt
to $12 less per share now than it was then. A
change of this magnitude, without apparent
reason, cannot be calculated upon by one who
is simply dabbling in stocks. With Just the
same absence of reason the value might de
cline $40 or even $40 more, and what is said o.
this railroad applies to so or go others. With
the closest figuring, and even with the posses
sion of multitude of so-called points" tht
OUTSIDE sPECULAToR
NAV at any time see the market slip away
from him, and find his margin wholly exhaust
ed 1t is the custom with most brokers to de
mand deposit for a margin of about $40 pei
share for high priced stocks, though when tnt
market is excited and uncertain double th1
amount is sometimes asked Tor. man O
comparatively limited means, who buys, Oh
his own Judgment large block OF stocks, sa.
DUU OF lUUU SndE6o, buan0o AAo AAAOAoJ ~. ~.
prize, but, if the tide turns against him, hi
Toss is equally large. 1t m eot in the lees
matter that the stock is intrinsically worth al
that he paid for it, and even more. The ad
va nee which he foresaw may in the end tax
nj, ,ce, but, unless he has the means at his com
ma nd to hold his purchase through good repor
and evil report, his Judgment IS worth nothing
and his action is imprudent to rashness Blu
If is lust here that the folly of stock specula
tion lies. Very few of those who interes
themselves in these operations have the prud
ence to keep within their means. A man IL
active business may be tolerably well of, bu
his money may be so tied up that he canno
drop it in lamps of $4,000 or $4,000, each t.
make coed the deficiency due in great de
cline in the MARKET hence, after time, HI
feels compelled to surrender his claim. To'
often IL happens that these great risks are as
sumed hv those who have little or nothing Il
fan back upon after the first deposit is ex
hausted. In these cases the talk about buying
with Judgment, everything considered, is M
better than the gamblers trust in some com
bination of numbers or colors he has invented
In the purchase of railway shares there is NJ
excuse for speculation, where the purchase
not made either outright, or, If taken on
margin, where the purchaser does not lee
abundantly able to take up the shares, shoult
q great and unforeseen reduction in price TAX,
mace. No doubt, if this plan was followed
sn,Gulation would lose much OF its charm T.
many. Unless man has large capital at hi
hack he could not hope to make great gains
bnt. none the less, this is the only way IL
which Judgment can be made to bear It's 70
Inn laf nC