Gambling (1930)
As compared with crap-shooting, always supposed to be the peculiar diversion of Negroes, nine-tenths of the operations of the Wall Street Stock Exchange favors craps, by every consideration of morals and social welfare. Unless the dice are loaded, crap-shooting is a game of pure chance, and the utmost that can happen is the transfer of actual wealth from one gambler to another. But in Wall Street, we have something much more complicated and much less defensible.
We have a great gambling pool, forming nine-tenths of a set of operations, of which the remaining tenth is legitimate and under present conditions necessary effort to sell capital to the highest bidder.
If the government owned all capital and distributed it by science, reason and welfare, as both Russia and President Hoover are now attempting to do, stock gambling would cease.
Around this, at present necessary operation, has arisen the habit of open betting on the future profit of the various industries seeking capital. Some of this betting takes the form of buying stock with the object of selling it for a higher price. There is an element of gambling here but it is the necessary gambling of privately owned capital and is as legitimate as crap-shooting.
Beyond this, however, there is a custom so wide-spread that it involved, during 1928, as high as seven billion dollars of borrowed funds in addition 30 or more billions of owned wealth. This consists of betting on the price of stock without buying it and with only the deposit of enough actual funds to insure the head gambler from sudden loss. It is this dealing in “futures,” that has set the United States crazy for the last few years, taking funds from legitimate industry, depleting thrift accounts and stealing the wages of millions of people; it has made an astonishing number of level-headed Americans dream that they were going to gamble themselves into a financial heaven, where they would subsist on honey and illegal wine, and would sing, dance and do no work forever and forever.
Moreover, the dice in this gambling are nearly always loaded. Everybody who knew anything knew that they were loaded. The head gamblers know the present value of stocks and the reasonable future values. They deliberately deceive their clients by subtle propaganda to pay unreasonable prices. The President of the United States, the Secretary of the Treasury, the heads of great industries, the leaders of social welfare, all knew that stock prices were unreasonably high, yet, for the most part, they were dumb until the crash came. They knew that prices were being paid for part-ownership in industrial enterprises, which were far beyond anything which the enterprise could ever legitimately earn, and yet, they were silent. They listened in silence to a shameless propaganda that explained how a Miracle was happening and that miracle was involved in American financial leadership of the world; that in some magic way values were going to be re-cast so as to make Steel Common worth two or three times what it was really worth by any sane measurement.
Every professional gambler in Wall Street, backed by the money distributing power of the Federal Banking System, assured the world that this was so, with the idea of making profit by the gullability of ignorant investors. Every person of ordinary wisdom knew that the crash must come because the market had gone out beyond the steadying influence of real values and depending solely on gamblers’ lies and the gullability of morons.
Just as there were gamblers who were gambling for a rise, and lied to make it, so there were other gamblers who, as the crest approached, gambled for a fall, and did not spare the truth to bring it about. The result was a crash so stupendous that it shook the world.
What was that crash in its essence? If it had been merely the transfer of money from gambler to gambler, it would have resembled a huge crap game and have been negligible save in its moral results. There would have been the same amount of wealth and work as before and the same number of idle blood-suckers. This is what the New York Times assured us was true after the crash, while President Hoover and Secretary Mellon joined in similar statements.
But these were half-truths. For the stock crash was far more than a transfer of hard-earned wealth and thrifty savings from poor people to the gambling rich. It involved destruction of wealth, work and faith—these three and the greatest of these is the Faith, called Credit. We count as wealth today in organized industry not only what we have but what we expect to have; not only what we do but what we plan to do. Destroy plans and overthrow legitimate expectation and industry is sick or dies. Of the great structure of modern time production and space distribution, the actual present goods, the pittance of cash money and the current days work are bagatelles compared with the expected value of goods to be finished, the value which goods now Here will have when they are There. Destroy the faith built on present Work—the Credit reared on present Cash and Goods and you have destroyed wealth and more than wealth.
That is the reason the President and Cabinet and millionaires are rushing about and crying all is well when no one knows better than they that all is not well because gamblers have been squandering the nation’s wealth which industry needed and expected.
The collapse of the Stock Market was not only loss of capital taken from legitimate industry and sunk and destroyed in wild-cat schemes; it was above all, a shaking of the faith of Americans in American industrial organization and in all private capitalistic enterprise. It was the most tremendous blow to the integrity and efficiency of the capitalistic and privately-owned industry of America which that organization ever received. American capitalism was stabbed in the house of its friends. Nothing that Socialists have said or thought for one hundred years has so openly and crassly pointed out the weakness and injustice of industrial life in America.
The end is not yet. The President may repudiate all his individualism and deny the laissez-faire of private enterprise by hurriedly summoning the captains of industry and pleading with them for that co-operation, scientific foresight and submergence of the profit motive which only an efficient State can supply in fullest measure. The fundamental weakness of our system still remains. We are gambling with loaded dice. If gamble we must, we would far better confine ourselves to craps.
Citation: Du Bois, W.E.B. 1930. “Gambling.” The Crisis. 37(1):29–30.