In What Respect is Speculation Useful in Markets Generally?
Speculation in the sense of buying for cash or on ordinary credit what the purchaser has very good reason for knowing is uncommonly cheap, and what he believes will, ere long, improve in price, does not come under the category of speculation such as that to which the foregoing remarks refer. The kind of speculation which is of benefit to the community may be termed corrective speculation, as implying a restoration of prices, through its agency, to a reasonable relative level. The great benefit which is caused by the one kind of speculation is the antithesis of the evil which results from the system of “time-bargain” speculation as practised in all markets. The one kind of speculation is the legitimate advantage taken of being able to buy any article cheap, or to sell any commodity that is dear, whereas the other is nothing better than pitch and toss in disguise.