126 THE WORK OF THE STOCK EXCHANGE 
value in the daily work of the “Street,” are nevertheless too 
superficial and mechanical to penetrate to the bottom of the 
matter. 
Distinction Between Speculation and Gambling.—Com- 
ing now to the equally important distinction between specula- 
ion and gambling, this is not only clear in theory but, despite 
a few technical details, also quite clear in practice. There are 
at least four principal differences between speculation and 
gambling : 
1. Speculation necessarily involves the purchase or sale of 
some form of property, while gambling does not. 
2. The risks assumed by the speculator arise fundamentally 
from risks inherent in the property which he buys or sells, 
while the risks of gambling are created by the gambler and are 
based upon future events without any necessary relation to 
ownership of property. 
3. The speculator’s buying or selling operations affect the 
forces of supply and demand, and tend to bring about the very 
change in price for which he hopes, while the bets placed by the 
gambler have no effect whatsoever in determining the actual 
outcome of the fortuitous events upon which he stakes his 
money. In other words, a speculator who purchases 100 shares 
of Northern Pacific because he anticipates a rise in its price, 
assists by this very purchase in bringing about the rising market 
for which he hopes, while a gambler who bets $10 that it will 
rain next Thursday, or that Yale will win the Harvard football 
game, exerts absolutely no effect upon atmospheric conditions, 
and in no way strengthens the sinews of the team of his 
preference. 
4. In gambling transactions the winner makes what the 
loser loses. But in speculation, in the alternate rise and fall 
of prices, there are occasions where practically everyone profits, 
and where practically everyone incurs losses. Gambling has no 
=conomic justification, except when it is organized as insurance. 
But speculation is a profoundly necessary economic force.