STOCK SPECULATION—DANGERS AND BENEFITS 123
rather than attempt to analyze his psychology. For everyone
has to think about the future, whether he be a savings bank
president or a mere wagerer on horse races or prize-fights.
The degree of intelligence employed has little to do with the
objective character of what is done. One might spend a life-
time studying race horses and make bets upon them with the
greatest intelligence, and yet such money wagers would be com-
pletely different from purchases or sales of goods, even though
these were made very stupidly. Indeed, few of this world’s
population—perhaps fortunately—are economists, and may sin-
zerely think they are betting when in reality they are engaging
in legitimate trade. Or the victim of a “bucketshop” may
think he is purchasing shares, but if his supposed broker actu-
ally fails to purchase them, the thing which takes place is only
a money wager, no matter what the deluded customer may
think about it.
There are really three distinct processes which are usually
referred to as “investment,” ‘‘speculation,” and “gambling”
for want of more exact and mutually exclusive terms. The
first—“investment”—consists in the placing of capital into
some form wherefrom an income is expected; “speculation” —
the second process—occurs when some property is dealt in with
the hope of gaining a difference between buying and selling
prices; lastly, the third process—or ‘“gambling”’—amounts to
staking money or goods on some fortuitous event. Forgetting
for a moment the inexact labels which language has struck
upon these three courses of action, it is obvious that each of
these processes genuinely differs from the other. The man
who buys Steel shares in order to get the dividends which they
will pay, is clearly doing something quite different from one
who buys and sells Steel shares in order to secure for himself
a profitable difference between buying and selling prices. It is
still more apparent that a third person who does not buy or sell
Steel shares at all, but merely stakes $10 that they will rise or
fall in price is performing an even more different act. From
