The Birmingham age-herald., 1908-02-10
Reaardina Speculation.


 Henry Clews, the well known banker and fnancier, in his weekly letter of Saturdays date, says:
 "A great deal of nonsense is also heard about speculation. Now, speculation, like many other good things may be carried to excess, and is then injurious and open to the severest criticism. But specula- tion within reasonable limits is most bene- ficial. It is one of the main incentives to enterprise. Crush this disposition to venture, or the willingness to accept risk and enterprise would languish, trade and industry would decline, and we should gradually settle down to certain indus trial and commercial decay. In the present highly developed state of modern civiliza- tion speculation is a motive power of the first importance, and being a part of hu- man nature itself cannot be eradicated. In the course of ordinary business, specuia- tion is the natural balance wheel of trade, furnishing a class of operators who are willing to buy or sell when others for va rious reasons are disinclined. Moreover, by keeping up the conflict between large body of buyers and sellers the true value of securities or commodities is more safe- ly determined than when speculation Is entirely absent. The short seller is always buyer at a lower price. and therefore a supporter in case of decline. Conversely the long buyer restraints undue advances by selling to secue his profits.
 Again, the banker is better able 10 judge the value of collateral in a free and active market; a factor which. is much to the advantage of both legitimate bor- rowers and lenders who may not have the remotest interest in speculative move ments. The giving of credit and the mak- ing of 1oans is very largely dependent upon a thorough test of values such as speculation only often determines. Of course, speculation is sometimes carried to excess, and much injury results in con- sequence. Such excesses which are the consequence of defects in human nature must always be expected and are better corrected by experience and public opin- ion than by any artificial regulation. Who has not the right to profit from good business judgment, especially If that judg- ment incurs the risk of the future; and who should complain if his own judg- ment leads him into losing transactions? Concerning speculation there is also an- other foolish misconception. Speculation is frequently confounded with gambling although the two are radically different. Speculation Is always based upon knowl- edge and facts, whereas gambling deals solely with chance.
 "It is fallacy to suppose that any but ] a small percentage, of transactions on the New York stock exchange come under the head of gambling What difference Is 1 there between buying stocks and bonds on part payment, or margin as it is often called, and buying land or houses or other property with only one-ffth in cash l and carrying the balance on mortgage. Such transactions are speculative, are strictly moral and entirely matter of business judgment All operations enter ing into the future are necessarily specu- latiye. So far as the New York stock exchange is concerned. its rules are drawn for the purpose of protecting legitimate trading, and an actual transfer of prop srty is required for every transaction. Of course, abuses exist in al ltrades and VIII continue to exist; rendering It the more necessary to use a little intelligent dis- crimination before condescendinD to loose