The Washington herald., 1913-10-25
Taking the Ultimate Chance.
Copyright. 1913. b, c. NJ Keys. New York;

| rs there any difference between gam
bling and speculation That question,
in one form or another. occurs over and
over again in the correspondence Of
every financial editor. every man en-
eaged in the securities business. the real
estate business. or any business where
| the element of speculation comes in. IL
is answered I'm entirely different ways, ac-
cording TO the training of the man who
has to answer it The economist draws
very clear distinction; the broker or
dealer usually confesses that he knows
nothing about IL: and the average person.
| who thinks that he neither CANDLES nor
speculates, classes the two together and
says that they are the same thing.
A couple of incidents from the news Of
| the day may help to answer the ques-
! tion.
The day after the first game in the
worlds series in New York. the news
Tapers all contained an item to the ef-
| feet that a man. who has been wei!
known In New York for along time as
tie proprietor of d popular chop house,
committed suicide. IL came out a little
| later that he had bet 5000 even on the
| New York team to win the irst game:
and, of course, he lost his bet Then IL
transpired that he had been heavily
in debt and that this bet was simply
the taking of an even chance 40 get
money which he had to have II Is not,
of course. known whether he had de-
termined before he had made the bet
TO destroy himself IL he lost. but it
may be assumed that he realized that IL
would make his position almost :mpossi-
bic IL he lost. He did not go to the
game himself. but sent his son instead.
That was what one might call pure
gamble. Assuming that the two teams
are equal and there certainly was moth
ing In the records TO indicate an over
whelming superiority on either side-it
was practically on the toss Of q coin
that Mr.. Still bet not only his money
but his life. There was nothing proba-
bic about the outcome either way.
On the evening of the day Of that
game. a young man from the West met,
In a hotel uptown in New York, a direc-
tor of one OF the biggest railway sys-
TENS of the country. The director was a
friend Of the young mans father He
told the young man that there would
be a meeting of the board of directors
OF the railway oil the following Thursday
and that these directors would consider
the question of declaring a large extra
dividend. He said that the market eX-
pected a dividend OF this sort and that
1t would be disappointed. All this came
out in the course OF an ordinary friendly
Conversation.
As ii happened the young man had
been for some years quite speculator in
a Western market. The director who
was talking to him did not know this.
or possibly he would not have talked so
freely. However that may be, the next
day. the same day on which the man
who bet on the Giants paid his debt in
full. this young man from the West
opened an account in a Wall Street COM
mission house and sold a substantial
amount OF Union Pacific. The writer
does not know what the outcome of the
operation was.
This is speculation. as defined by the
economists, who ought to know what
they are talking about.
When YOU put these two illustrations
side by side. there is a radical difference.
In the first one. the outcome depended
almost entirely upon chance. In the
second, the outcome looked pretty sure
to the young man who made the COM
mitmenL Applying this distinction to
the ordinary use OF ordinary money by
men and women in, what is loosely called
an investment way, IL would appear that
any one who goes into a security that
is obviously a risky security without
knowing anything about il is gambling
with his money. II. on the contrary, he
made a careful study of that security,
sought lntelnBenI BulQdnCe, anu hhdhy
reached a conclusion that there was
probability that the security would grow
stronger instead of growing weaker, and
then, after reaching that conclusion.
bought 1t, he would not be gambling,
but speculating.
There Is a distinction from a market
point of view There is. of course, an
other very clear distinction from the
standpoint of ethics. The gambler is
simply playing with his money. The
specuIator is taking a business risk with
his money with a business object in view.
namely, the pursuit of profits which in
his Judgment. carefully made and cour-
ageousiy followed. are reasonably sure.
Gambling. whether in stocks or In any
other form of activity. belongs on
lower ethical and moral plane than
speculation. In fact. when you come
to analyze IT. we find that almost every
business venture. and. indeed, most OF
the daily activities OF life are I'm the
nature of speculation. They amount to
little more than backing your judgment
which you reached by using the best
means in your power. Business, how
ever, is not gambling by any means,
although In many businesses there come
occasions when a mans judgment fails.
and he simply has to take what he
knows to be an even chance. or even
a chance that he knows to be somewhat
Of a risky gamble.