In Praise of Speculation

"I am a speculator," wrote Arthur William Cutten in last week's Saturday Evening Post. "Speculators have been of immeasurable value to the development of civilization. ... I am not boasting when I say that I have traded more heavily than any other individual who ever stood in the wheat pit.* This is the fact. In stating it I am establishing my right to be heard along with other men, who only theorize about it."

Bull Cutten, who has been an independent trader for 26 years and has never lost as much money as he has made, was ostensibly writing an autobiographical narrative, "The Story of a Speculator." The first of three installments told of his boyhood in Guelph, Ont. his going to Chicago, his first contacts with the Pit and how he learned to "sweat blood" when prices moved against him. But woven through the story was his defense of speculation, his malediction of all regulations that impede it.

At present the chief restrictions to speculation in the Pit are the taxes which make "scalping" (small, quick trading) difficult, and the rule that all transactions of over 500.000 bu. must be reported. When Farm Board operations were at their height many speculators gave up trading in the Pit because prices were no longer subject to natural movements. Bull Cutten had his first experience with regulation in 1926. He had bought tremendous amounts of wheat and felt that "events were justifying the judgment of conditions I had formed months before when I had taken my position. By every right of commerce I was entitled to a profit on my transaction for the risk I had taken." The Board of Trade, however, forced him to sell some of his holdings because the Grain Futures Administration had said they were too large. At the news "Cutten is unloading," the price, of course, broke sharply. Last week Speculator Cutten observed: "Since that day the trend of wheat prices has been steadily downward. . . . The state of the market is attributable to Government action . . . [and] due to the fact that speculators have been frightened or driven away from it. What speculation has been done has been carried on largely by Government bureaucrats using the taxpayers' money. If men seeking a profit had been using those millions, a real benefit might have accrued to the nation." Foes of stock speculation claim that a few insiders deceive and mulct the public. Foes of commodity speculation claim that in bull markets the price of foods is lifted beyond reason, while in bear markets the farmers are cheated of their just returns. Professional speculators in all cases insist that they are needed to maintain an active market, necessary in stocks for investors and in commodities for merchants who must hedge their purchases of raw materials. Speculator Cutten, well aware that further regulation threatens the wheat pit, which "is for me as the deck of his ship to a sailor," insisted: "Speculation is wrong when it is done with other people's money, but who other than the speculators are going to assume the necessary risks of commerce which cannot and should not be borne entirely by the merchants? Do not tell yourselves that we can dispense with these risks. They are part of existence on earth."

*One of the first things Speculator Cutten learned in the Pit was the code by which traders would signal their clerks what was going on. Rapid rotation of the fists upward meant selling. This, followed by a flex of the arm and a slap of the biceps would mean "selling by Armour." Popular signs at present: a finger on the nose refers to Uhlmann Grain Co.; holding up a package of cigarets refers to Rice & Co., because traders see a resemblance between Dan Rice and a camel; a quick jerk of the arm as if drinking refers to Stein, Alstrin & Co.; crossed arms refers to Jackson Bros., Boesel & Co., perhaps because crossed arms may signify two brothers; using the hands as if breaking a stick used to refer to Bendit & Co. but now means James E. Bennett & Co.; to put a forefinger in the mouth and bite it refers to J. J. Bittel; to draw one's hands over an imaginary tremendous stomach refers to Fred Lewis of F. S. Lewis & Co.

This file is automatically generated by a robot program, so reader's discretion is required.