The German economist, Cohn, has given us one of the most accurate and satisfactory definitions of speculation. He defined it as "the struggle of well-equipped intelligence with the blind power of chance." It is a fundamental economic principle that all productive industry involves a certain amount of risk. This results from the great specialization in industry, the creation of world markets, the vast time which elapses between the performance of the labor and the final utilization of the products, and the uncertainties of nature herself. Risk is an integral factor in business.

The rise of any new factor in industry causes the development of certain agencies and agents to perform the duties connected with them. The use of credit in business accounts for the existence of the modern commercial bank. So likewise, the factor of risk as a fixed quantity in modern industry has called into service the broker and the speculator, who form a distinct class to assume this work and burden. Commercial speculation is but a contract based upon risk, much as an insurance contract is based upon risk. Each is recognized as a beneficial contract when properly used. Speculators do not determine prices; they simply express their judgment upon what prices will be. The transactions of speculators reflect their judgment of the business outlook, not their wishes. Through their transactions they bring to the knowledge of the producer and the distributor all facts which are necessary to arrive at the intrinsic value of their product measured by the supply and demand. At the same time, organized speculation offers national and international markets for the exchange of goods and securities. Speculation as an institution is entitled to public support so far as it contributes to public welfare.

Call it what you will, speculation will always be with us. Prudes may frown upon it, superficial thinkers may confuse it with the commonest forms of gambling, and sociologists may dream of the day when envy, ambition, and covetousness will be a thing of the past and. the human race can exist in peace without these human traits, but their agitations and outcries can no more check speculation than human ingenuity can devise a scheme to control the tides.

What the blood is to the human body, speculation is to business. It is absolutely a necessary part of it. The only difference, if there is a difference at all, is in the form it assumes. What would business be without incentive? And incentive is all there is at the bottom of speculation. Men are willing to take risks to acquire wealth. They are willing to stake their capital upon opportunities which appeal to their judgment.

Everyday Speculation

From the pioneer who heedlessly plunges into a trackless waste to find a new home with greater opportunities for the acquisition of wealth, to the modern capitalist who, to control the trade in a given commodity, plans gigantic trusts, is a long line of speculators, as speculation is behind all their ambitions. The inventor who is, apparently, of all men the least of speculators, takes greatest speculative chances, for he uses up time and energy to shape his ideas into some form where they can be of practical use, and should he fail has wasted them utterly and lost all.

Illustration after illustration could be given to demonstrate how speculation in a greater or less degree enters into the material welfare of each individual.

Without speculation no business could progress. It is the dynamic power behind every incentive to activity and progress. It is the desire for gain which prompts the inception of every venture. If it is all that, then it can be readily seen how necessary speculation is. In fact, speculation in its highest form has shaped the course of history and often changed the map of the world.

International Significance

The discovery of America by Columbus was accidental; the real purpose behind his venturesome journey was to find a shorter route to India. After he found a new hemisphere, his discovery inflamed the spirit of conquest among numerous intrepid explorers, few of whom set out upon their expeditions with any thought of planting their country's standard over new territory for the mere sake of fame. Most of them went hunting for new treasures and to expand the commerce of their nations. Cortez was only a looter. He and his soldiers despoiled Montezuma and the Incas of their treasure for his king, himself, and his men. Pizarro followed the same course. The Indians, our real Americans, were not originally blood-thirsty savages, but a peaceable race of primitive men who welcomed the appearance of the white men among them. Their friendship was only turned into hate when they began to realize that the white man came among them solely to wrest their land and possessions from them.

Behind most wars among nations there is the commercial instinct. This is but another form of speculation on the grandest scale. It is a rivalry for acquisition between nations instead of between individuals, and this rivalry rises to a point where it arouses the martial spirit of a race to acquire by force of arms what cannot be secured by peaceful measures.