124 THE WORK OF THE STOCK EXCHANGE
the economic standpoint, it is essential in each case to concen-
trate on what kind of an act is committed, rather than what the
one who does it may be thinking about at the time, or whether
he is intelligent or the reverse, or indeed whether he is really
a nice man in other respects or not.
Distinctions Between Investment and Speculation.—The
theoretical distinction between investment and speculation in
securities is thus clear enough. Yet in actual daily life this
distinction becomes almost impossible to establish, owing to
the usually inextricable connection between income and profits
in securities. Of course, some cases of almost pure investing
and of almost pure speculating exist. A savings bank account
is an. almost completely non-speculative investment, for there
is no chance for appreciation of principal, but simply an
income derived from it. Yet even here the failure of the bank
or currency troubles might enter into the case. So, too, the
purchase of a non-dividend-paying stock in order to profit from
a possible rise in its price is almost a pure speculation; never-
theless, the rise in price will probably be due to an actual divi-
end or the hope of a declaration of a dividend upon it.
As a matter of fact, the purest cases of speculation occur,
not in securities but in commodities, which do not of course pay
interest or dividends, and hence do not involve this element of
income which so extensively pervades the consideration of
securities. In the field of articles and commodities the proto-
type of the investor is the consumer or user, and the distinction
between speculation and investment consumption there depends
upon whether the individual purchases goods to use or consume
himself, or to sell to some other consumer with an attempt to
get a profit. In the latter case he is just as truly a speculator
as the margin purchaser of stocks or the short seller of cotton
fFiituires.
Returning to the instance of securities, however, the aver-
age man who buys 100 shares of stock wants both an income
and a profit to be derived bv selling it at a higher price later on,
