If he intends to buy a large amount of stock, which he knows is going to rise, he throws off the cloak of secrecy when he enters the market to sell, and depresses the price as a preliminary feint, so that the contemplated rigging of the price may be as little encumbered by bulls as possible. When it is known in a market that a great speculator is selling, weak bulls are speedily frightened out, and when he has such an object in view it is his “game” to intimidate with all the force of his prestige and the power of his capital. Such a man must have a concrete hardness of indifference through which nothing can penetrate to his heart. It is as necessary to the success of his operations that he possess no more regard for the feelings or pockets of other people than a hungry tiger would for him if he were airing himself unconcernedly in a Bengal jungle. He has a purpose in view, just as a surgeon has when the amputation of a leg has been decided upon. The speculator’s sole aim in the operation is the profit, towards which he cuts his way, regardless of the nature of the obstacles to be overcome, just as the knife is plunged into the flesh, severing the arteries, muscles, and sinews that surround the bone which it is the object to reach and saw through.
For a man to tread a path in which he must systematically not only disregard the interest of other people, but deliberately calculate upon the weaknesses of human nature which characterize the crowd, in order to work upon them for his own ends, it is obvious that he must be constituted in a quite exceptional manner, and not in a way that it is at all desirable that others should attempt to imitate. If uninitiated people who enter the arena in which some of the professional speculators flourish, were to spend some months in gathering information and in close observance of the modus operandi, so far as they can get to see and hear, many of them would soon be persuaded that they were utterly useless at such work, and would retire, thanking their stars they had been sensible enough to look on at the game before hazarding anything themselves. From the very fact that but few are successful as professional speculators, it can be safely argued that but few are competent to engage in the business at all, even when educated in all the tricks and deceptions necessary as collateral aids to the machinery which we have shown, and shall show more in detail, to be a sine qua non. Those qualities which have, more particularly in the past, characterized the successful diplomatist are also of the utmost importance to the speculator. Successful diplomatists in all times, with few exceptions, have been men who have never scrupled to resort to finessing, chicanery, and the ruse de guerre in every form under cover of a saintly innocence that would shame the devil. Deception in all its forms will be found in the armoury of the professional speculator, and the weapons, two-edged, are employed with a laboured precision of which a glimpse by the outsiders is occasionally to be obtained because it is impossible completely to conceal the fringes of the organisation by which his gains are netted.
The Non-professional or Haphazard Speculator.
We now turn to the non-professional speculator, and what a pitiable plight is that in which these gentlemen in ninety-nine cases out of one hundred ultimately find themselves. The members of the Stock Exchange liken their place of gathering in Capel Court to a barn, and themselves to fowls inside it, who repair thither every day to pick up the golden grain thrown in by the public. This description is not exaggerated, and the more marvellous does it become as one reflects upon the subject. Many and many is the man that has toiled and earned a fortune to produce him a competence for the rest of his days, who has been lured into that fatal vortex, in very many cases because industry had become a habit with him, and he found retirement irksome. “I amuse myself with a little jobbing in the stock markets, just to have some object for going up to town twice a week,” he says to a friend in the train, with whom he chances to be travelling. Such is the beginning of more sorrow in respectable households than the world has any idea of. Many a pensive countenance furrowed by the Stock Exchange, carries in its deep lines the index to a heavy volume of lugubrious family history, which, partly from shame, is sealed but to the few who must know its contents. Prosperity brings wealth in its train, and people put by at first their gains, until a taste for the excitement of dabbling in the markets grows into a thirst, and from that into a mania, which is generally the frontier to be repassed with empty money-bags, and a sad heart, by a wiser, if not a better man. It is not so easy to be good on nothing after one has had £5,000 a year, and hence a deal of the mischief that results from the foundering of Stock Exchange speculators.
The haphazard man, who is the antithesis of the professional speculator, will generally be found as differently constituted as are the results of his operations. The man who makes a study and business of speculating, investigating every detail that it seems necessary to probe until he has adapted it to the rest of his machinery, will be found to be a hard-grained man, sailing very close to the wind, while your persistently haphazard man is mostly a person of flabby character, and no less flabby mind, as easily frightened off a line that he has set himself to follow, in the innocence of a heart that expands with a delusive consciousness of possessing power, as a stray rabbit. Such a class of man is to be found by hundreds in the haunts of the Stock markets, and they are always fidgetting in and out, first as little bulls, and then as little bears, disappearing after a sharp panic like flies from a joint of meat that is rudely disturbed by the shop-boy, with the important difference that whereas the flies always get something, the speculators invariably drop their money.
The following letter which appeared in the Spectator of the 4th October, 1873, struck us as being a propos, as regards a portion of it, of this part of our subject. It affords another instance of the success which follows the trial of a haphazard speculator’s “scientific plan.” In playing against a public bank the gambler should know in these times that the science of mathematics has been already employed on the side of the managers, and is arrayed against him as a fixed law, working on the side of the croupier, whether he wills it or not:—
“A friend of mine who was not with us, but who had had many weeks’ experience at Monaco, had communicated a little plan for an all but moral certainty of winning, which was founded on the most scientific principles, but the only defect of which was that the banks gave one no conceivable means of carrying it into practice—a defect, indeed, which I believe he himself had verified by leaving Monaco a loser, in spite of his scientific plan. His idea was this:—It is obvious that even where,—say at roulette,—the chance of the next ‘odd’ or ‘even’ is precisely one in two, or one-half, the chance of a run of any given eight results in a specified order,—such as odd, odd, even, odd, odd, even, even, even,—will be only one in 2 × 2 × 2 × 2 × 2 × 2 × 2 × 2, or one in 256. If, then, my friend bethought himself, you could but steadily stake your money so as to stake it against the arrival of this highly improbable compound event, you would be sure to win. I quite agreed in this extremely sagacious principle, but the difficulty, unfortunately, was in the application of the theory. The bank gives you no chance at all of staking your money against any complex event. It admits only of your staking it in favour of or against the simple elements of this compound event. And, unfortunately, though it always remains highly improbable that any specified run of eight will take place, as you can only stake your money time by time on each single one of the eight component elements of the event, and as, in each of them separately, the chance is one in two, and not one in 256, it is simply impossible by the rules of the game so to play as to have the chances in your favour. I did, indeed, think of requesting the bank to let me stake on the result of two or three successive twirls of the roulette table, instead of on one at a time, but since my French was extremely bad, hardly adequate to protesting against the accidental raking up of my money when I had actually won, and since, had it been better, I had no hope that the authorities would comply with a request so very unsafe for themselves,—the drift of which, indeed, the croupiers might hardly have caught at the first suggestion, but would certainly have suspected,—I reluctantly abandoned my friend’s scientific receipt for winning, and was contented to lose.
“The gamblers of our party were but three in number, and all firm of purpose not to exceed the small risk we had prescribed for ourselves of 125 francs each. I was the eldest and rashest of the three, my money being soonest gone, though not for two or three hours, and it was never for a moment doubtful but that I should be a loser in the end. My companions were both cooler and cannier in their play. They did not, like me, precipitately put down their money before the croupiers had raked up the stakes lost by the previous catastrophe. They did not stretch over other players so awkwardly as I did,—indeed, the croupiers had to rebuke me mildly, by begging me to use a rake; and then, when I did use the rake, I managed to knock the most desperate gambler in the room about the head with it, and draw forth a fierce remonstrance, which made me recall with uncomfortable vividness that there was a pistol-practising ground (‘Tir-au pistolet’) in the garden of the hotel, which would readily furnish the instruments for a meeting, wherein I should hardly have come off with a mere moral lesson. Indeed, I felt clear, after watching my companions,—one of them a shrewd counsel, learned in the law, the other a cool, sagacious Cantab, who came out high in the Tripos the other day,—that neither of them had the true gambling instinct as strongly as I, though so far as their experience went, it seemed to confirm my own. And what was that experience? This chiefly,—that I was distinctly conscious of partially attributing to some defect or stupidity in my own mind every venture on an issue that proved a failure; that I groped about within me for something in me like an anticipation or warning (which, of course, was not to be found) of what the next event was to be, and generally hit upon some vague impulse in my own mind which determined me; that whenever I succeeded, I raked up my gains with a half-impression that I had been a clever fellow, and had made a judicious stake, just as if I had really moved a skilful move at chess; and that when I failed, I thought to myself, ‘Ah, I knew all the time I was going wrong in selecting that number, and yet I was fool enough to stick to it,’ which, of course was a pure illusion, for all that I did really know was that the chance was even, or much more than even, against me. But this illusion followed me throughout. I had a sense of deserving success when I succeeded, and of having failed through my own wilfulness, or wrong-headed caprice of choice, when I failed. When, as not unfrequently happened, I put a coin on the corner between four numbers, receiving eight times my stake if any of the four numbers turned up, I was conscious of an honest glow of self-applause. I could see the same flickering impressions around me. One man, who was a great winner, evidently thought exceedingly well of his own sagacity of head, and others also, for they were very apt to follow his lead as to stakes, and looked upon him with a sort of temporary and provisional, though purely intellectual respect. But what quite convinced me of the strength of this curious fallacy of the mind, was that when I heard that the youngest of my companions had actually come off a slight winner, having at the last moment retrieved his previous losses by putting his sole remaining two-franc-piece out of a hundred and twenty-five francs he was willing to risk, on the number which represented his age, and gained in consequence thirty-two times his stake, my respect for his shrewdness distinctly rose, and I became sensible of obscure self-reproaches for not having made use of like arbitrary reasons for the selection of the various numbers on which I had staked my money during the period of my own play. It was true that there was no number high enough, sad to say, for that which would have represented my own age, so that I could not have staked on that,—but then, why not have selected numbers whereon to stake that had some real relation to my own life, the day of the month which gave me birth, or the number of the abode in which I work in town? Evidently, in spite of the clearest understanding of the chances of the game, the moral fallacy which attributes luck or ill-luck to something of capacity or gift, or incapacity and deficiency, in the individual player, must be profoundly ingrained in us. I am convinced that the shadow of merit and demerit is thrown by the mind over multitudes of actions which have no more possibility of either wisdom or folly in them than—granted, of course, the folly of gambling at all—the selection of the particular chance on which you win or lose. When you win at one time, and lose at another, the mind is almost unable to realize steadily that there was no reason accessible to yourself why you won and why you lost. And so you invent—what you know perfectly well to be a fiction—the conception of some sort of inward divining rod which guided you right when you used it properly, and failed only because you did not attend adequately to its indications.
“Such is the experience which I carried away with me from amidst the objectionable smells, the unsavoury company, the malignant gnats, the haggard revelry, and the general moral squalor of Saxon-les-Bains; and when my wife reproached me, with triumphant references to her own warnings, for the missing five pounds, I replied, what I really feel,—though I know I shall never convince her of it,—that my experience was not dearly bought. Is it the only case in which the fiction that we ourselves have earned—whether good or evil fortune—forces itself with absurd tenacity upon us? Luther himself could hardly have desired a better proof than this of the pranks which the imagination plays us when dealing with that sense of merit and demerit, so closely bound up with our human egotism. We give ourselves credit, and get credit, I suspect, for a vast deal more both of wisdom and folly in life than we deserve. Are nine-tenths of the prizes and the blanks of life at all more ascribable to any fine selective purpose or deficiency thereof in him who draws them, than my losses, or my friend the Cantab’s sudden retrieval of his loss? Yet I still look upon that able and thoughtful youth with a deep sense of respect for his cleverness in retrieving his losses, and on myself with a melancholy consciousness that, like ‘Traddles’ in ‘David Copperfield,’ my native awkwardness of mind must have been the cause of my very moderate reverses.—I am, Sir, &c.,
“An Instructed Gambler.”[26]