[28 THE WORK OF THE STOCK EXCHANGE
Exchange to buy or sell dividends or to bet upon the course of
the market.” Furthermore, “Public announcement by a Stock
Exchange firm or one of its members regarding moneys held
for the purpose of betting on elections or on any other matters
's prohibited.”
Unlike the Stock Exchanges of London, Paris, Berlin, and
other great financial centers, the New York Stock Exchange
even forbids optional contracts (“puts,” “calls,” etc.) on its
floor, on the grounds that when such contracts are not actually
-xercised, they might be construed as wagering on the course
of prices, despite their value as a means of insurance. It is
therefore only common justice to declare that, as far as the
Stock Exchange is concerned such phrases as “stock gambler”
or “gambling in stocks,” when not a deliberate and conscious
perversion of the truth, can arise only from the fullness of
economic ignorance.
Economic Function of Speculation.—One vital economic
service of market speculation consists in the assumption of
those necessary risks which always exist during the process of
distributing any kind of property. So fundamental an eco-
nomic factor as speculation inevitably pervades every type of
market and not simply the organized markets. The corner
grocer who buys 100 pounds of sugar at 8 cents to distribute
among his ‘customers at IO cents is essentially a speculative
dealer. He has no intention of consuming himself all this
sugar, but buys it with the hope of profiting by selling it at a
price above its purchase price. This profit is earned because
of the services which he renders in distributing the sugar, and
is justified because of the risk which he assumes in holding it
himself ready for sale. If the price of sugar declines below the
purchasing price before the grocer has sold out his stock, he
may of course incur a loss on his inherently speculative dealings
in it.
The economic functions of the speculative dealer in Stock
Exchange securities are in their main features identical with
