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APPENDIX 
as an indoor securities exchange; and (3) the extension of the 
security business of legititnate brokerage firms, and especially of Stock 
Exchange firms. 
CHAPTER V 
Security Speculation—Its Benefits and Dangers 
(Va) Professor H. C. Emery, of Yale, defined speculation in the 
following terms: 
“In the first place, it is well to recognize what we mean by 
speculation. The simplest definition is that speculation consists in 
buying and selling commodities or securities with an idea of making 
profits out of fluctuating values. Why do such fluctuations occur? 
Simply because the conditions of supply and demand are always chang- 
ing. It is the exception rather than the rule for any article of com- 
merce or any piece of property to maintain a perfectly stable price. 
Since the demand of society is constantly changing, values must con- 
stantly fluctuate, and, as long as values fluctuate, speculation must take 
place. It is not conceivable that, in a system of buying and selling 
such as we have, values could go up and down without somebody 
being benefited or injured, or without men consciously attempting to 
secure the benefit or avoid the injury by their purchases and sales. 
Speculation has always existed wherever buying and selling has ex- 
isted—ever since the days when Joseph cornered the grain supply of 
Egypt as reported in the book of Genesis. As long as private owner- 
ship of property is allowed and the value of property varies, specula- 
tion will continue. . . . 
“Some people speak as if all dealing in securities should be of a 
pure investment nature. Khey fail to realize, however, that invest- 
ments themselves become speculative in proportion as speculation pure 
and simple is abolished. Investment means primarily the purchase of 
income-yielding property in order to get an annual income, rather 
than to make profits from the fluctuations in capital value; but since 
capital value does fluctuate, investment involves the risk of loss, and 
_. . this risk of loss to the conservative investor is made very 
much less when he has an active speculative market for the disposal 
of his property. 
“Still another distinction that must be made is that between specu- 
lation and gambling. In the broadest sense, of course, there is a 
gambling element, not only in all bets, but in all our activities. If 
gambling means simply the taking of unreasonable risks, almost every 
act of our lives might be accused of having a gambling element by