The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-04-05
The ETHICS OF SPECULATION

Cnder this caption John A. Ryan dis
cusses stock and produce exchange oper-
ations. in the International Journal of
Ethics, and concludes that speculation as
an institution is economically of doubt
great and widespread evils. and morally
1t is vitiated by very considerable
amount Of dishonest deals and prac-
tees GAS an individual action" he
says, speculation at it's best is morally
questionable"
1t would be difficult to deny the second
and third Of Mr.. Ryan's conclusions. It
is truism to say that socially specula-
ton is productive of great and widespread
evils. 1t encourages the gambling spirit
and as a presumably straight and broad
road to riches it lures thousands from
happy lives of legitimate, well ordered
effort to the feverish pursuit of wealth
that, whether gained or lost, is sort
OF false wealth, sort of something for
nothing, even though in the mad dalliance
with chance the life of the votary is
wrecked When you read in the paper of
some solid business man turning out
to be hollow failure or of some big fnan-
cial house topping over you run your
eyes down the column looking for the
cause, sure that two times out of three
some speculation really foreign to the
business has been the cause of distress
Most faithless employees, most recreant
stewards are the victims of speculation.
1t is equally notorious that specula-.
ton abounds with dishonest deals and
practices. 1t is not considered so in the
stock exchange where all are fighting with
the same weapons, but many Of the battles
between bulls and bears which take I'D so
much space in the accounts of market
operations. are essentially dishonest in
their cause. What is an assault upon
stock. but an attempt to reduce it's price
below Its value, and what is supporting
stock except an effort to initiate it's value?
Moreover, these frequently dishonest
ends-yieWed from the standpoint of the
disinterested ethicist-are attained by
dishonest methods. chief among which is
the circulation of false reports or the
studied creation Of false impressions con-
corning the value of a stock
The economic value of stock exchange
is held by It's apologlsts to lie in it's
creation Of ready market for securities
and In Its assumed capacity to adjust
prices correctly. The principal economic
value of produce exchange is the crea-
ton Of body of spectators who are
professional risk takers for the actual
producers and sellers For instance.
practically all of the legitimate and real
wheat business of Minneapolis is paral-
leled by hedging" with fictitious wheat.
The legitimate dealer by means of the
hedging process insures himself of a
fair margin of profit and denies himself
the possibility of great gains while escap-
ing the possibility of great losses.
Mr.. Ryan tries to show that there is no
necessity for the creation of special
class OF risk takers and argues that the
producer or the manufacturer ought to
take the risks of his own business. His
argument is thin and weak on this point.
1t is hard to contemplate the great, strict
ly legitimate business operations of the
present day which, over considerable
periods of time and between far distant
points, are conducted upon safe basis,
by the aid Of the exchange without APP
preciating the latters value In fact it
is difficult to say how it would be possible
to carry on business involving large
sales for future delivery if 1t were not
for market that is always willing to
take the. risk. The individual, If he
undertook to carry the risks of fall in
prices between the time of production or
manufacture and the selling time would
lay himself open to ruin by single slump
OF the market. When the individual con-
tracts to deliver wheat, say at some
future time, wheat that he actually has
in elevator, he runs the risk that when
that time comes wheat will be cheaper
than 1t was when he bought. But II he
sells fictitious wheat to a speculator at
the same time that he buys the wheat
intended for future delivery he Is on the