828 READINGS IN RURAL ECONOMICS 



distinguish sharply between the truly speculative time transactions 

 and the essentially non-speculative transactions between different 

 places. The accomplishment of this result turns upon the full 

 recognition of the essential interdependence of the markets that 

 constitute a market system and upon the development of con- 

 tracts for future delivery. Grudgingly the community has come 

 to recognize that speculation is inevitable and necessary, but 

 speculative gains are still associated in the minds of many citizens 

 with dishonesty, gambling, and predatory activity. Because the 

 sale of commodities without displacement seems to involve no 

 effort, but merely chance, the profits are deemed to be tainted. 

 The modern market system is thus misunderstood because of 

 a firmly rooted prejudice, and the great improvement in the 

 technique of trade almost unrecognized. 



Speculation is to be distinguished from gambling by the nature 

 of the contingency. Gambling is concerned with pure contin- 

 gency apart from any other consideration. The outcome of any 

 uncertain event can become the basis of a wagering contract. 

 The results of games, races, political contests, and the like are 

 the characteristic field of the wager. Attention is concentrated 

 wholly upon the occurrence or non-occurrence of the event. In 

 an election bet, for instance, there is no implication that either 

 party will be directly concerned in the outcome ; so far as wager- 

 ing is concerned they might as well bet upon the turn of dice. 

 A speculative transaction involves an element of contingency. It 

 assumes that something is going to happen of which no one 

 knows precisely what the outcome will be, but the speculator is 

 interested in the consequences of the event. To bet on the out- 

 come of a horse race is in itself pure gambling. The same event 

 may contribute an essential fact to a speculative transaction. 

 Suppose a person has bought a relatively unknown horse, thinking 

 the animal seriously under-rated because of poor training and 

 driving. The horse is taken in hand with a view to ultimate sale 

 when its true powers have been revealed. The value of the 

 horse can be demonstrated only by a series of successful perform- 

 ances on the race track, so that the owner is taking a chance, 

 as it were, upon the outcome of the races. It will be readily seen, 



