SPECULATION 
375 
informed and cool. Their operations, as has already been said, 
exercise a stabilizing and smoothing influence. 
In the case of paper exchanges, the situation is very different. 
The fluctuations may be great, often are rapid, often are difficult to 
foresee. The very circumstance that they are great and unpre- 
dictable brings in an element by which these irregularities are 
accentuated : speculation by the “outside public.” Even the 
best informed and most experienced of dealers often do not know 
what the rates of exchange are likely to be in the future, and find 
themselves buying and selling from day to day more or less 
blindly. Side by side with them come the non-professional buyers 
and sellers, the “speculators” in the narrower sense. Foreign 
exchange being a standardized article, like wheat or cotton or 
securities, it can be bought or sold on a large scale by any one. 
Given this possibility, and given also large and rapid changes in 
price, persons of all sorts and kinds make their way into the market- 
place. Whereas with gold exchanges the margin of profit on any 
one transaction is small, and a large total gain can be got only thru 
a great volume of business spread over a considerable time, under 
paper there is the chance of quick turns and big profits from a few 
transactions, even from a single one. Chances of this kind, leading 
as they do to speculation by all sorts and conditions of men, lead 
also to manipulation, pools, rumors and lies — the familiar 
phenomena of a gamblers’ market. 
Whether speculation under such conditions serves to lessen 
fluctuations is no more clear as regards paper exchange than it is in 
the analogous cases of cotton, wheat, stocks. As regards gold 
exchange, speculative purchases and sales doubtless operate to 
lessen the rapidity and the range of the fluctuations. But where 
““the public” takes part, as in these other cases, the rapidity of 
Auctuations is probably made greater by speculation; the ups and 
downs are more frequent, and they are more abrupt. It may be, 
however, that their range is made less rather than greater. So 
good observers have been led to believe, and have been led to con- 
clude that in this regard the outcome of wide-spread speculative 
dealings is on the whole good. But one should not be unduly