The San Francisco call., 1904-02-04


,-apyright. iso4 by Joseph q BowlesD
Speculation in the minds OF many is
gambling. Tt is frequently said Of men
who speculate on the Board Of Trade
or stock Exchange that they gam
bic" or that they are gamblers" In
other words. the public has fallen into
the IDEA that speculation and gambling
are SYNONYMOUS But let Us reverse
the proposition. Whoever heard Is
charged that q man who visited a pool
room or faro bank. OF who sat IN
a poker game. did - Tor the purpose
Of speculating. So the two words
gambling and speculation are not
Synonymous. for they cannot be used
Interchangeable.
Speculation is a necessity In proof
Of this statement I refer the reader TO
the report Of what was known as the
industrial commission, appointed by
Coneress in 1898. This commission la
bored for three years Its first chair
man was the late Senator Kyle Of
South Dakota. who was originally a
strong granger and Populist, and as
such opposed TO speculation in farm
products. After a thorough inEestiga-
ton a report was adopted and cor
CURED in by every member Of the COM
mission which unreserVedly took the
ground that the grain Spectator rem
dered almost indispensable services to
the farmer in the distribution Of crops.
Somebody. the report stated, must
take the speculative risks Of changes
in the market between the time when
The crous are harvested and the time
when they are used b. the consumer.
The farmer might store his grain him
self. but he would have TO insure it
and take the chances Of loss in various
forms. This ould require more cap
ital than he possesses. and If he were
TO borrow for this haphazard purpose
he would have TO pay higher interest
than before. For similar reasons the
nsumer cannot store the grain in
large quantities and keep il until he is
ready 10 use it
The result is that q separate class
OF experts has been developed who
make il their business 10 store the
crops and take the chances of loss
and gain involved in that calling. In
other words, the spectators Of The
corn and wheat pits are the dis
tributers Of the nations farm pro-
ducts The commission found that
these men did the work on a closer
marginrof cost than the farmer could
do il. Thus the producer gets bet
ter prices and the consumer gets
cheaper bread than if there were no
professional spectators. Intense COM
petition among the dealers themselves
tends constantly TO cut down their
own profits and TO bring the producer
and the consumer closer together The
dealers are forced constantly to seek
10 reduce the risks Of their business,
while the mails and the telegraph en-
able the farmer to keep informed as
10 the latest conditions of she market.
The grower can convert his crop
quickly into cash capital and turn his
attention 10 preparing for the next
crop, leaving the spectators to attend
10 the risks and worries OF distribu-
ton.
Before future delivery trading. as
now practiced on the various boards
Of trade was established. every coun-
try grain dealer was a speculator in
cash grain and had TO contend with all
the uncertainties of the markets. To-
day he can work on an assured margin
delivery. To illustrate: A dealer in
Iowa buys 10000 bushels of ear corn
in January Of farmers and store it in
his own crib. Il viii be spring be-
fore Il is fit 10 shell and ship but the
dealer orders the commission mer-
chant on the Chicago Board of Trade
10 sell 10, 600 bushels of corn for May
delivery. Thus he has secured his
nfe h
deliver the corn in Chicago for FIVE
months. the length Of time it viii
take to cure. The dealer has made
what the public would call a specula-
tive saction. but he is certainly
not speculatOr. For has he not
eliminated the risk Of changes which
would possibly occur within the FIVE
months In the same way milIers
and grain dealers throughout the world
trade in futures" in Chicago in order
TO avoid speculsting in their business.
Confusion reigns so generally in
court decisions and the minds of the
public and the press that one cannot
bet reach the conclusion that there
has been a lack Of intelligent investi-
cation and education as TO the func-
fions Of speculation. Take, for in
rAoIlLtr "A EtlHE ellrIt one sees q CnaNCe
TO make a profitable deal on a corner
lot. be does not buy the property out
right, but puts up a sum of money
which gives him the option OF buying
ii al a certain price, say in sixty days A
week later he has an opportunity 10
sell the lot for "A larger sum than he
agreed TO pay for ii. and he does so.
making profit on the transaction be-
fore his option natures. His transac-
ton is just as much Of a speculative
character as the buying and selling OF
grain and stocks on margins. yet who
ever thinks OF branding the man who
speculates in real estate as a gambler
He is generally regarded as a benefac-
tor. for By carrying part OF the sur
olus area he helps to increase the
galue Of the balance Of The land in his
city, township or village.
A speculator on the Board of Trade
or Stock Exchange performs exactly
the same functions IL he is buyer OF