New-York tribune., 1918-11-05
How Spectators
Differ rom
Mere Gamblers.
Former Serve by Assuming Only
Necessary Risks. Econo-
mist Says

Critics of spectators like to cali
them gamblers, and persons without 8
clear notion of definitions seem unable
20 distinguish between the two words.
! On the legal side, distinctions be-
tween gambling and speculating have
not always been clean cut. John r.
Abney, of the New York bar, discusses
the question in "The Economic World"
especially in relation TO cotton trans
actions.
Professor Emery. of Yale Univer-
sity,' MIR. Abney writes, ''has perhaps
made the clearest statement of the
difference between speculation and
gambling. In substance he saws that
gambling is assuming an unnecessary
risk which nobody need assume. For
instance. nobody need assume the risk
of one horse beating another in a race
ii man assume that risk, he is gam
bhng. But the planter or somebody
e,se must assume the risk of carving
cotton until it is gathered and de
livered TO the manufacturer. If some
the planter and carry the cotton for
while, he is but assuming a necessary
FISK and, therefore, he is not gambling.
This same authority says that specu-
lation Is purchasing or selling and
subsequently selling or purchasing ins,
the same market for the purpose OF
making profit out of the change OF
price in the same market.
Bucket Shops Caused Prejudice
THE general impression Aat deal
ing on the New YORK Cotton Exchange
is gambling, arose perhaps from the
TACT that a great many persons some
years ago instituted what are known
as bucket shops and claimed that
they did the same sort of business
as was done on the New York Cotton
exchange. The method they generally
employed was to take orders for pur-
chases or sales of cotton and then.
instead of making valid trades with
other people for the delivery of cot
ton, they made pretended contracts
with other firms which they had
formed. They would then watch the
course of the market on the Cotton
Exchange and would pretend to close
out the presumed contracts when the
prices went against the customer in
order that their other firms might
make the profit. II the planter or
Spectator knew what such factors
were doing it was gambling on the
part of the planter or speculator; and
It was also gambling on the part of
the bucket shop keepers and their
other offices or firms. But as a gen
eral thing the planters and spectators
dId not know that tho bucket shop
Keepers were dealing only with them
selves; and IN those instances it was
not gambling on the part of the bucket
shop keepers; 1t was simply stealing
That sort of dealing created great
prejudice against the exchange. The
legislatures in the South particularly
enacted, and justly enacted. laws
against such dealing But they even
went so fsr as to forbid dealing in
cotton for future delivery. What they
did In substance was to forbid spec
ulation.
''Some people also think If man
does not himself intend to deliver or
receive delivery ct the time appointed
IT is gambling. But if he intend to de
liver or receive by having his broker
then do it in his stead, that is all suf
fcient. He who does a thing by an
other does it himself. Qui facit Del.
alum facit per Sc. SO If planter
sell his crop on the exchange and find
that he prefers to get his broker to
relieve him in that way so that he can
sell his crop at a nearby market he
can do so. If an investor wish to get
rid of his holdings before the time of
delivery he can have his brokers make
h contract with another person to take
from him. And if a manufacturer de-
sire to buy cotton on the exchange go
that he will be sure to be able to fHs
orders for goods at a certain profit and
afterward determine TO buy cotton di-
rect from the planter ne can buy the
cotton from the planter and sell cotton
on the exchange to be delivered by his
broker at the time appointed. All this
may be called hedging which has been
dec ded by the Supreme Court TO be not
gambling, but legitimate
Speculation Often Reckless