The Rules Of The Stock Exchange Contemplate Real Bargains

It has already been pointed out that the rules of the Stock Exchange contemplate real bargains: each seller or buyer is under the obligation to compel delivery of the securities in the one case or payment of the price in the other; and if the bargain be continued from one account to the ensuing account, the process is based upon fresh contracts contrary in nature to those for which they are substituted.

Time Bargains

But the system of time bargains possesses a character of a totally opposite description - the system which consists of a contract between two persons for the transfer from one to the other of a certain quantity of a commodity or security at a fixed price, and on a specified future date, or within a definite period of time. A little discrimination is necessary. When a jobber or speculator buys or sells he equally forecasts the future, but his forecast is the reasonable application of the doctrine of probabilities. He contemplates and calculates a probable general rise or decline of values above or below the price he has quoted or contracted; he does not enter into a calculation (which would be impracticable) of an advance or fall to a final decimal. But he who effects a time bargain does not consider a range of future values with a fair limit of divergence, in accordance with the custom of the jobber and speculator: he fixes upon a specific definite price. This, obviously, is not a reasonable or practicable computation; the probability of that exact value being attained is unity divided by the numberless multiplicity of different prices which the commodity or stock can show; and the more extensively and continuously its value can vary, the larger becomes the denominator of the fraction which represents the value of the chance, and the smaller, consequently, is the fraction itself. Hence this practically vanishing fraction differs so slightly from mere guess-work that a separation between the two cannot be assigned. It is, therefore, a pure guess, and may, not unjustly, be stigmatised as gambling. Moreover, time bargains are not associated with any system of counteracting extravagant depressions of values, or restraining abnormal excesses of prices, that tends to a resulting uniformity of values which proves advantageous to the investing community. This course involves, then, no general public service, and censure is the only criticism.

The Boundary Line Between Speculation And Gambling

It will thus be perceived that the boundary between speculation (tending to the common benefit) and gambling is exceeding difficult to define, and the line which speculation surpasses and thus merges into gambling is almost impossible to trace.

The Test Of Gambling

But a line does exist which each must detect for himself in the personal decision whether his operations shall include (as we have described) an accompanying public benefit, or whether his dealings shall conduce to public disadvantage and the personal degradation of character. The pestilent and degenerate practice of gambling is obnoxious, to language of detestation to which no bounds can be assigned. The gambler, into whatever affairs of business he may intrude his baneful presence, is he who speculates without resources adequate to the honourable satisfaction of the losses he may incur; who deliberately, therefore, starts with the intention of entailing these losses upon others; whose gains involve an exclusively personal benefit, but whose failures exclusively signify another's harm; who possesses no conception of, or belief in, that debt of responsibility which every man owes to his neighbour; whose operations embrace in their result no service to the general good; whose notion of dealing is simply that of dice-throwing in disguise, without the exercise of forethought or restraint of reason, and devoid of any fragments of the consciousness of public obligation; and whose character and capacity, in place of being braced and invigorated by the changes and chances of the vicissitudes of his activities, lapse more and more profoundly into moral decrepitude and decay.