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practice of engaging in business in order to make quick profits from fluctuations in prices, as opposed to the practice of investing in a productive enterprise in order to share in its earnings. The term is sometimes applied to investment in a venture involving abnormal risks along with the chance to earn unusually large profits, but most speculation consists in the buying and selling of commodities and stocks and bonds with the object of taking advantage of rapid changes in price. While the investor seeks to protect his principal as it yields a moderate return, the speculator sacrifices the safety of his principal in hopes of receiving a large, rapid return. The practice is defended as tending to stabilize prices and guide investment; it is attacked as the mechanism of financial crisis and panic when prices decline rapidly and as an inflationary factor when a commodity is in shortage and speculation drives up its price.

Public outcry over speculation has had an important political impact in several periods of U.S. history. During the progressive era in the late 19th and early 20th cent., speculation on Wall Street helped reformers led to landmark legislation regulating big business. Following the crash of 1929, which was widely blamed on the speculative abuses of the 1920s, the Roosevelt administration passed legislation regulating Wall Street and the banking industry. In the 1980s and early 1990s, critics attacked junk bonds, corporate mergers, and the savings and loansavings and loan association
(S&L), type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public.

The first U.S. S&L was founded in 1831.
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 industry as examples of speculative abuses that reduced America's economic competitiveness. In the late 1990s speculation was most evident in the enormously high market value attained by some Internet and computer company stocks and in the on-line day trading of stocks.

See also bankingbanking,
primarily the business of dealing in money and instruments of credit. Banks were traditionally differentiated from other financial institutions by their principal functions of accepting deposits—subject to withdrawal or transfer by check—and of making loans.
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; margin requirementmargin requirement,
that part of a security's price that a buyer must pay for in cash. The balance of the price is met by the broker, who, in effect, is supplying a client with a loan. The smaller the margin, the greater the inducement to speculation.
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; panicpanic,
crisis in financial and economic conditions, marked by public loss of confidence in the financial structure. Panics are characterized by a general rush of investors to convert their assets into cash, with runs on banks and a rapid fall of the securities market.
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See R. Sobel, Panic on Wall Street (1968); M. Mayer, Markets (1988); C. Kindleberger, Manias, Panics, and Crashes (1989); E. Chancellor, Devil Take the Hindmost (1999); G. J. Millman, The Day Traders (1999); C. R. Morris, Money, Greed, and Risk (1999); R. J. Shiller, Irrational Exuberance (2000).



in Soviet criminal law, a dangerous economic crime, one that infringes on the normal activities of Soviet trade and on the interests of purchasers.

Speculation is the buying up and reselling of goods or any other articles for the purpose of making a profit. For an action to be deemed speculation, it is irrelevant where and from whom the goods are purchased—whether in a store or at a market, whether from the rightful owner or from one who has acquired the goods unlawfully. It is likewise irrelevant to whom the goods are sold, whether to a state or public organization, kolkhoz, or individual. Criminal liability for speculation begins at the age of 16.

Speculation is punishable by deprivation of freedom for a term not exceeding two years, with or without confiscation of property, by correctional tasks for a term not exceeding one year, or by a fine not exceeding 300 rubles. More severe punishment —deprivation of freedom for a term not exceeding seven years, with confiscation of property—is provided for in cases of speculation as a form of business or on a large scale (see, for example, the Criminal Code of the RSFSR, art. 154). Petty speculation committed for the first time is punishable through administrative procedures. (For liability for currency speculation, seeFOREIGN-EXCHANGE OFFENSES.)



a form of philosophical thought that is idealistically oriented and disassociated from sense experience.

According to F. W. von Schelling, speculation “constructs” existence, attempting to deduce the world in its entirety from certain initial categories. Two kinds of speculative thought may be distinguished in the history of idealism—the rationalist and the intuitivist type. The first is predominantly conceptual; it deals with abstractions and is patterned after mathematical reasoning (compare the role of mathematics as a model for speculation in Pythagoreanism, Platonism, and Neoplatonism); it is concerned with the problems of formal logic and idealist dialectics. The second type of speculation strives for the direct and intuitive “contemplation” of the idea as eidos—an intellectual model, as it were. At times the intuitivist type of speculation also played an important part in the development of dialectics—for example, in the work of Plotinus and J. Boehme; as a rule, however, it degenerated into mysticism.

Speculation was the predominant method of philosophical reasoning in ancient philosophy, and it was the ruling method in medieval Scholasticism as well. F. Bacon rejected speculation, holding that “all science is based on experience, and consists in subjecting the data furnished by the senses to a rational method of investigation” (K. Marx and F. Engels, Soch., 2nd ed., vol. 2, p. 142). Speculation has been rejected by the materialist school of thought of the modern age.


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