Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1914-10-29
STOCK SPECULATION
ON PAR WITH RISKS
OF EVERYDAY LIFE
Broker Declares 1t Is Not
Gambling Unless Applied
to All Departments of the
Trade.

The common statement heard these
days that speculation is dead and will
never revive, and that the Stock Ex-
changes no longer have a function to
fulfil. Is very interesting. but perhaps
If the meaning Of speculation and its
accompanying phase, marginal dealings
were better understood the criticism
heard from time to time would be Of a
different character.
The primary motive OF speculation OF
any kind is a desire for a profit Most
people connect speculation with securities
only and do not understand the full
scope of the word. The farmer raising
his crop Is never accused Of speculation
The position Of the cotton grower today
illustrates to a nicely the speculative pos
sibtlitles OF this department OF American
industry. When the present cotton crop
was planted 1t was done with the sole
Intent Of selling It al profit In great
many cases the planter borrowed at his
bank on the prospective profit and spent
the funds in raising the crop. He now
finds himself In the unprecedented posi-
ton of not being able to market the
fruits OF his toll and cannot pay his
notes He has done what security spec
ulator often does. He has bought his
crop on the margin. He has put 20 per
cent in labor in it and the banks have
advanced 50 per cent in cash, and with
the price of the commodity declining to
a point where he cannot get his labor out
of II, in fact cannot realize enough to
pay the amount borrowed, then he, like
the man who buys securities which de-
cline must hold his product until such
f price Is reached where he can sell at a
profit. or sell for what he can get and
take his loss.
Was not the cotton grower speculatins
on such n good demand for cotton when
Ee planted il as to net him a profit?
The grower Of wheat and other grains
plants his crop with the same hope, and
In fact every enterprise IS gone into with
the hope Of profit, and the business
situation is shrewdly considered by the
one making the venture.
When a piece Of property is purchased
with a cash payment and the balance
borrowed on mortgage the buyer has one
of two purposes-tirst, either he considers
the property cheap ana hopes To sell at
a profit or, secondly, he is attracted to
il for living purposes ana hopes to be able
ultimately to pay for it in full and own
II. Therefore, We still have the elements
Of speculation.
When securities are purchased on mar
gin the same principles are involved. The
purchaser deposits % per cent OF the
purchase price, He has the same mo-
tive. He is either OF the feeling that
the security by reason OF one OF a great
many means, viz, the condition OF bus
mess throughout the country, or the char
acter OF the business, which might have
unusual possibilities. IS cheap and he ex-
poets ultimately 70 sell il at a profit, or
else he is attracted by the dividend re-
turn or other consideration, and intends.
If possible, 10 own the security outright.
and considers the 70 per cent, paid at tho
start merely the first instalment. In
either case the predominating factor il
speculation. and he is taking advantage
OF this particular feature,
Perhaps the greatest misnomer given TO
this form OF trading in securities is gam
bling ami that IL rs merely betting on the
future OF the market, This is not the
case, unless IT is applied 20 all depart
meuts of trade. Is the cotton grower
betting on the conditions that will per-
NIT MIN 10 sell his CrOpP Is the produce
dealer VINO buys a cargo OF potatoes, II
he sells them a "A profit, betting" Is the
man vino buys a property and sells It al
n profit winning a Det2 II a man bets
.n the coming election, say 5000, and
wins, the other side of the transaction
loses 5000.
A purchaser takes 100 shares OF 7. G. I.
and pays 50 FOR n, and deposits $500 as
margin, and then sells il for So The
broker makes his commission OF s25 on
the whole transaction, and pays over TO
the purchase the balance Of $500 Does
this come out Of any one2 Does the
broker lose 500 on the transaction, or
even risk II, 10 make 325? Does It sound
TeaE0rabie2
u al depends on the point Of view,
BROKER