Economic speculation

“ When the balance between the capitalizations of various industries and between the incomes of the various periods proves to be false, the inevitable readjustment causes suffering and loss to many, but particularly in the inflated industries. But, because of the mutual relations of men in business, few even of those who have kept freest from speculation can quite escape the evils. ”

“ A speculative movement need not spread forthwith throughout the industrial system. The great episodes of speculation and collapse that occurred during earlier modern times were not of the nature of speculative inflation affecting the entire business community occupied with industry. ”

“ If to carry consumable goods from the places where they are superabundant to those where they are scarce, is a good pecuniary speculation, is it not an equally good speculation to do the same thing with regard to labour and instruments? ”

“ Intention is shifting and uncertain. There is chance in every industrial, commercial, and agricultural operation. But for the point at hand, the test is simple: do more exchanges take place than are necessary, under the existing division of labor, to advance the materials of industry through the stages of production, and get things finally to the consumer? If so, the excess of exchanges is speculative. Trading between men in the same stage of production is speculation. ”

“ Certainly not of speculation in things which are the products of labour - in agricultural or mineral productions or manufactured goods, for the effect of speculation in such things is simply to equalize supply and demand, and to steady the interplay of production and consumption by an action analogous to that of a fly-wheel in a machine. ”

“ The natural and inevitable consequence of this state of things, at a moment when trade was suddenly revived, was a rage for speculation. Not only merchants and manufacturers were seized with this epidemic; the desire for higher profits than could be obtained by quiet and perfectly safe investments spread amongst every class. ”

“ The consensus of opinion among those who have studied the course of speculation on exchanges seems, however, to be that if manipulation of prices and monopoly can be kept out of the market, and if the laws of supply and demand are allowed to operate freely, the effect of speculation, particularly of dealing in futures, has a healthful balancing effect on the market. ”

“ A great deal of nonsense is also heard about speculation. Now, speculation, like many other good things, may be carried to excess, and is then injurious and open to the severest criticism. But speculation within reasonable limits is most beneficial. It is one of the main incentives to enterprise. Crush this disposition to venture, or the willingness to accept a risk, and enterprise would languish, trade and industry would decline, and we should gradually settle down to certain industrial and commercial decay. ”

“ Wild speculation by all classes of the community, particularly in land, mining shares, and Stock Exchange securities, but not as a rule in produce, the wealthiest capitalists in the country entering into stock speculation in the late summer, and using most unscrupulously their power over company finance to help along their purposes ”

“ The financial crises of the present day are short-lived and confined to commercial centres, but three centuries ago they ruined whole peoples. And what singular speculations they were! Of all things in the world in which to make a corner, to excite a speculation, to be puffed by brokers, it would seem as if flowers would be the last. ”

“ You can and you will reanimate that spirit of reckless speculation, and set up again some of those windy enterprises which have drawn away so much of the capital of the country from productive business, and wasted it. You can and will make our banks and institutions of credit once more the mere tenders of wild speculation and dealers in fictitious values. You can and will seduce our merchants and manufacturers once more to spread their capital and their credit all over creation. You can and will make trade lively for a while by driving up prices to an unnatural height. ”

“ Fluctuations in employment are tied to all other wasteful fluctuations in our mechanism of production and distribution. One of these wastes is speculation. In securities or commodities, the larger the volume of speculation, the wider become the upward and downward swings and the more certain the result that in the long run there will be more losses than gains in the underlying wealth of the community. ”

“ The most prosperous period in the industrial and commercial history of the United States begot an epidemic of speculative madness such as was never before known, and probably never again will be. Everybody had money in abundance, and the desire for speculation in superabundance. ”

“ The example of one stimulates another; speculation rises on speculation; bubble rises on bubble; every one helps with his breath to swell the windy superstructure, and admires and wonders at the magnitude of the inflation he has contributed to produce.
Speculation is the romance of trade, and casts contempt upon all its sober realities. It renders the stock-jobber a magician, and the exchange a region of enchantment. It elevates the merchant into a kind of knight-errant, or rather a commercial Quixote. ”

“ It will be proper, however, in this connection to define exactly the limits of speculation, and to point out more specifically how the Value Principle creates it, and how the Cost Principle extinguishes it.
By speculation is meant, in the ordinary language of [Pg 72] trade, risky and unusual enterprises entered upon for the sake of more than ordinary profits, and in that sense there is attached to it, among merchants, a slight shade of imputation of dishonesty or disreputable conduct. ”

“ It may revive more rapidly even than legitimate business does; and as it grows to greater dimensions, it will draw away from legitimate business and press into the service of speculation as large an amount of currency as it can lay hold of. The expansion of speculation, therefore, is likely, nay, it is certain, to reduce the present abundance of money in the loan market, and again to bring forth here and there a feeling of scarcity. ”

“ One of the resources presenting itself most naturally to men in a position to profit by it was speculating with other people's money, and very naturally the result of such speculation was disastrous in the highest degree. ”

“ Some accident which excites expectations of rising prices, such as the opening of a new foreign market, or simultaneous indications of a short supply of several great articles of commerce, sets speculation at work in several leading departments at once. ”

“ It is a notorious, yet unappreciated fact, that speculative enterprises lie at the foundation of all financial disorder, for which, if a remedy can be provided, the very considerable talent and time which is now devoted to it would be turned into channels of general usefulness and productiveness. Production is the foundation of all wealth, and, consequently, to increase wealth, production must be increased. Speculation is that spirit which constantly saps the vitality of wealth, and, therefore, society has no greater nor more debasing enemy than speculation. ”

“ Great instability in the tenure of wealth must flow from the operation of these causes; for the balance of trade must ever be suffering disturbance by the inordinate action, at some point, of those engaged in commercial and business pursuits. This disturbance we see almost every day, in the dishonest spirit of speculation and overreaching that prevails to a melancholy extent. Business is not conducted, in this country, on the permanent, healthy, honest, and only true basis of demand and supply ”

“ If all are endeavouring to extend them, it is a certain proof that some general delusion is afloat. The commonest cause of such delusion is some general, or very extensive, rise of prices (whether caused by speculation or by the currency) which persuades all dealers that they are growing rich. And hence, an increase of production really takes place during the progress of depreciation, as long as the existence of depreciation is not suspected ”

“ Such vicissitudes, beginning with irrational speculation and ending with a commercial crisis, have not hitherto become either less frequent or less violent with the growth of capital and extension of industry. ”

“ This is the practice of specie payments, and a most mischievous one it is, too; it is the sole idea that leads to great inflations, and consequently to great collapses in finances and values. Under this system there never was nor never can be a reliable mercantile value to anything. Fluctuation is its direct result, while speculation, without this, would cease, and the vast horde of mere speculators who spend their whole time in it, would of necessity be compelled to become producers of some kind. ”

“ No other idea appears to have been held by the founders of your nation, but that your land was a chattel, to be disposed of for money, and as much a subject of barter and speculation as merchandise, and like it, liable to that depression in value which a superabundant supply produces. Its unequalled advantages as a subject for speculation became more and more apparent as your population increased. ”

“ When they extend their views to a further extent than they can command, and found their calculations on contingencies, they become gamesters of that class which is held in horror under the name of speculators: and hence arises a somewhat indistinct dread and dislike of all speculation; while the fact is, no exchange whatever could go on without more or less real speculation. The farmer must speculate on the seasons; the manufacturer on tastes and fashions, and on the supply of raw material; the merchant must speculate on war and peace, and all domestic and much foreign policy. ”

“ The less trustworthy people are, the higher rises the rate of interest, the larger becomes the amount of capital hoarded, the greater are the impediments to industry. The further traders and people in general go beyond their means, and hypothecate the property of others in speculation, the more serious are those commercial panics which brings disasters on multitudes and injuriously affect all. ”

“ Now, sir, but for some speculation that had been entered into before they were, the one would have neither had the silver spoon in his teeth, nor the other the hot joint. Without speculation, commerce could not exist. In the community where its spirit is not felt, they must be dull as horses in a ring; moving round and round as regularly and as monotonously as the wheels of a machine, to procure the every-day bread and cheese of existence. I have been a speculator all my life—I am a speculator still. ”

“ The more civilization there is, the greater the creation of wealth; the more wealth there is, the greater the volume of speculation that creates wealth. In such circumstances it is idle to talk of a time when panics shall cease, because confidence and enterprise must ever push onward, speculation in material things must accompany them, supply185 must overtake demand, and human nature with its moods and caprices must finally pay toll. ”

“ Let not this lesson be lost on the rampant and half-crazed speculators of the present day. Those who buy gold or flour, leather, butter, dry goods, groceries, hardware, or anything else on speculation, when prices are inflated far beyond the ordinary standard, are taking upon themselves great risks, for the bubble must eventually be pricked ”

“ They set forth an exhaustive array of statistics, instructions and warnings; they furnish elaborately charted plans indicating many of the pitfalls of speculation; they tell how to avoid these, how to buy, what to buy, when to buy and how to make money; but while the theories advanced are oftentimes sound and easily comprehended, very few people profit by them, because when once caught in the maelstrom of stock speculation the average man becomes more or less mesmerized, and at critical moments his conservatism, his resolutions and his theories all take flight. ”

“ Frequent legislation in regard to any branch of industry, affecting its value, and by which its capital may be transferred to new channels, must always be productive of hazardous speculation and loss. ”

“ Such so-called investments are in reality highly speculative. They involve risks which are unknown and altogether to be avoided. Now no one speculates in his own legitimate business, for there he is acquainted with the hazards which, he has learned, require the best of knowledge and the greatest of prudence. It is the allurement of the unknown that tempts him to seek unearned profits through speculation in outside regions where, in the nature of the case, the chances must be against him. ”

“ But when (as in political economy one should always be prepared to do) we shift our point of view, and consider not individual acts, and the motives by which they are determined, but national and universal results, intellectual speculation must be looked upon as a most influential part of the productive labour of society, and the portion of its resources employed in carrying on and in remunerating such labour, as a highly productive part of its expenditure. ”

“ The wisdom of man, in my humble opinion, cannot at this time devise a plan, by which the credit of paper money would be long supported; consequently, depreciation keeps pace with the quantity of the emission, and articles for which it is exchanged rise in a greater ratio than the sinking value of the money. Wherein then is the farmer, the planter, the artisan benefited? An evil equally great is the door it immediately opens for speculation, by which the least designing, and perhaps most valuable part of the community are preyed upon by the more knowing and crafty speculators. ”

“ Even in our finances, which are confessedly our weakest point, we doubt if the experience of any other nation will enable us to form a true conception of our future. We shall have, beyond question, the ordinary collapse of speculation that follows a sudden expansion of paper currency. ”