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ATLANTA BALTIMORE BIRMINGHAM BOSTON BUFFALO CHARLOTTE CHICAGO CINCINNATI CLEVELAND DALLAS DENVER DETROIT JACKSONVILLE KANSAS CITY LOS ANGELES MINNEAPOLIS NEWARK NEW ORLEANS NEW YORK PHILADELPHIA PITTSBURGH HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS BULLETIN EXECUTIVE OFFICES 15 BROAD STREET. NEW YORK PORTLAND PROVIDENCE SAINT LOUIS SALT LAKE CITY SAN DIEGO SAN FRANCISCO SEATTLE TULSA WATERTOWN BERLIN LONDON MANILA PARIS SHANGHAI HAVANA MEXICO CITY MONTREAL VOL. XII NEW YORK, JUNE, 1929 No. 6 Speculation and Speculators THE more one thinks about the present financial situation, the more confusing it becomes. Conflicting views are advanced by various parties, some whose reasons are patent; others whose interest is academic. Individual views, considered separately, may appear to have sufficient strength of logic to dominate the course of reasoning. When these views are considered in relation to the whole situation, they may lose much of their force. Such is the plight of "speculation," now so frequently and widely discussed. Speculation, as used in connection with securities, connotes risk. A speculative investment is one involving risk, but nevertheless one inspired by hope of gain. A speculative investment lacks the assurance of profit. There is no promise of income. In fact, the chances are that there will be no income, at least for some substantial period. The reward, if it comes, will be in the form of increased value. A principal transaction ultimately will be the means by which any profit is extracted. The aircraft industry is a speculative industry. Investments in securities of aircraft companies are speculative investments. There will be hundreds, perhaps thousands, of companies organized to build aircraft and aircraft equipment. Most of them will fall by the wayside and millions of dollars will be lost. Out of the milling process will emerge a few companies in whose hands will rest the aircraft business of the country. The radio field offers another analogy. Various and sundry amateurs will be moved to enter the business by hope of fortune. The savings of friends and relatives will be borrowed for the enterprises. Business men, with what they believe to be a genius for organization, will put together companies and attempt to exploit inventions. Crash after crash will resound through the land, interspersed with the wailings of widows and orphans whose inheritances have been swept into oblivion. But finally, radio, television, and what not, will bring some modern wonder of which Bellamy, projecting his imagination a hundred years into the future, never dreamed. The capital for the companies which will carry on these enterprises will be furnished by investors. They will be speculative investors, whether they know it or not. Advancement in new and unexplored fields depends upon the risk which investors are willing to take. If those who take such risk are speculators, if the development of these enterprises is speculation, industrial progress depends upon speculation, and those who furnish funds for the exploitation of new fields are speculators.
Speculation and speculators
Haskins & Sells Bulletin, Vol. 12, no. 06 (1929 June), p. 45
|Source||Originally published by: Haskins & Sells|
|Collection||Deloitte Digital Collection|
|Digital Publisher||University of Mississippi Libraries. Accounting Collection|
|Identifier||HS Bulletin 12-p45|