57o THE POPULAR SCIENCE MONTHLY 



Here is a risk which the business man can not escape ; neither can any 

 one else ; it affects us all, and, for the most part, in an evil manner. 



2. The rising prices have fostered speculation in all lines of in- 

 dustry and investment. Large profits have been made in recent years 

 only by those who have taken large risks, often foolhardy ones. 

 Cautious investors — inelegantly but clearly expressed — have been stung, 

 while the owners of corporation stock, real estate and other speculative 

 properties have made in many cases scandalous profits. Consequently, 

 more and more people have turned to the riskier investments. The 

 additional demand for them then forced their prices still higher, which 

 in turn furnished an incentive for further speculation. Thus in many 

 instances stocks have climbed to heights which, relative to other values, 

 simply can not be permanently maintained. Likewise, in nearly every 

 city of importance in the United States real estate values, particularly 

 land, have reached such ridiculous figures compared with other prices 

 that they simply must collapse (beholding their own monstrosity). 



This means a financial panic. Credit operations in recent years 

 have been based too largely upon uncertain and inflated money values. 

 Some time in the reasonably near future, during a period of rather 

 general liquidation, the paper profits of our speculative classes will 

 show what they really are — phantoms which dissolve into nothingness 

 at the touch of business reality. 



The panic of 1907 was perhaps principally due to the speculation 

 of the previous period of rising prices. However, except for a tem- 

 porary halt after the panic, the movement upward has continued 

 unabated. Moreover, it probably will continue many years to come; 

 at least the fundamental cause of the movement — excessive gold pro- 

 duction — gives no promise of lessening its operation for a long time. 

 In the meanwhile, before final adjustments are made, before a final 

 high level of prices is reached, or before a downward swing is started, 

 the writer fears that we are doomed to several panics, probably severe 

 ones, bringing disorganization of values, collapse of business, unem- 

 ployment and general hard times. 



Apart from panics, look at the social waste of speculation ! For 

 example, the ordinary dabbler on the stock market has no real interest 

 in the corporation whose stocks and bonds he is buying, and he does 

 not create any substantial values. Nor does he buy because he knows 

 that the stock is selling for less than its intrinsic worth. He has a tip 

 or a " hunch " that the price will go up, and he takes a chance at easy 

 money. But win or lose, he neglects any sound business for which he 

 is trained, and so wastes his time for the public. 



Likewise, the multitudes of real estate dealers the country over are 

 not bona- fide real estate men, studying the needs of their community, 



