The psychologist who tries to disentangle the interplay of human motives finds hardly a problem for his art to solve when he approaches the conscientious investor. His work has brought him savings, and his savings are to work for him. Hence they must not lie idle, and in the complicated market, with its chaotic offerings, he knows what he has to do. He seeks the advice of the expert, and under this guidance, he buys that which combines great safety with a fair income. The intellectual and emotional processes which here take control of the will and of the decision are perfectly clear and simple, and the mental analysis offers not the least difficulty. The fundamental instincts of man on the background of modern economic conditions must lead to such rational and recommendable behaviour. A psychological problem appears only when such a course of wisdom is abandoned, and either the savings are hidden away instead of being made productive, or are thrown away in wildcat schemes. Yet of the two extremes the first again is easily understood. A hysteric fear of possible loss, an unreasonable distrust of banks and bankers, keeps the overcautious away from the market. But while such a state of mind is said to be frequent in countries in which the economic life is disorderly, enterprising Americans seldom suffer from this ailment, and even the theoretical doctrine that it is sinful to have capital working seems not to have affected practically those who have the capital at their disposal. The specific American case is the opposite one, and with regard to those reckless investors it seems less clear what psychological conditions lie at the bottom of their rashness.

Foreign visitors have indeed often noticed with surprise that the American public, in spite of its cleverness and its practical trend and its commercial instinct, is more ready to throw its money into speculative abysses than the people of other lands. What is the reason? Those observers from abroad are usually satisfied with the natural answer that the Americans are gamblers, or that they have an indomitable desire for capturing money without working. But the students of comparative sociology cannot forget the fact that many national institutions and customs of other lands suggest that the blame might with much more justice be directed against the other party. America prohibits lotteries, while lotteries are flourishing on the European continent. The Austrians, Italians, and Spaniards are slaves to lotteries, and even in sober Germany the state carries on a big lottery enterprise. President Eliot once said in a speech about the moral progress of mankind that a hundred years ago a public lottery was allowed in Boston for the purpose of getting the funds for erecting a new Harvard dormitory, and he added that such a procedure would be unthinkable in New England in our more enlightened days. Yet in the most civilized European countries, whenever a cathedral is to be built, or an exhibition to be supported, the state gladly sanctions big lottery schemes to secure the financial means. The European governments argue that a certain amount of gambling instinct is ingrained in human character, and that it is wiser to create a kind of official outlet by which it is held within narrow limits, and by which the results yielded are used for the public good.

This may be a right or a wrong policy, but in any case, it shows that the desire for gambling is no less marked on the other side of the ocean. In the same way, while private bookmakers are not allowed at most European races, the official “totalisators” offer to the gamblers the same outlets. Every tourist remembers from the European casinos in the summer resorts the famous game with the little horses, a miniature Monaco scheme. And in the privacy of the too often not very private clubs extremely neat card games are in order which depend still more upon chance than the American poker. Moreover, the Europeans have not even the right to say that American life indicates a desire for harvest without ploughing. Every observer of European life knows to what a high degree the young Frenchman or Austrian, Italian, German, or Russian approaches married life with an eye on the dowry. Hundreds of thousands consider it as their chief chance to come to ease and comfort. The whole temper of the nations is adjusted to this idea, which is essentially lacking in American society. It is evident that no method of getting rich quick is more direct, and from a higher point of view more immoral, if taken as a motive for the choice of a mate, than this plan which Europe welcomes. The same difference shows itself in smaller traits. Europe invented the tipping system, which also means that money is expected without an equivalent in labour. Tipping is essentially strange to the American character, however rapid its progress has been on the Atlantic seaboard.

Of course it would be absurd to ignore the existence and even the prevalence of similar attitudes in America. If the dowry does not exist, not every man marries without a thought of the rich father-in-law. Forbidden gambling houses are abundant, private betting connected with sport is flourishing everywhere; above all, the economic organization admits through a back-door what is banished from the main entrance, by allowing stocks to be issued for very small amounts. In Germany the state does not permit stocks smaller than one thousand marks, equal to two hundred and fifty dollars, with the very purpose of making speculative stock buying impossible for the man of small means. The waiter and the barber who here may buy very small blocks of ten-dollar stocks have no such chance there. Stock buying is thus confined to those circles from which a certain wider outlook may be expected. The external framework of the stock market is here far more likely to tempt the man of small savings into the game, and the mere fact that this form has been demanded by public consciousness suggests that the spirit which craves lotteries is surely not absent in the new world, even though the lottery lists in the European newspapers are blackened over before they are laid out in the American public libraries. A certain desire for gambling and quick returns evidently exists the world over. But if the Americans are really speculating more than all the other nations, a number of other mental features must contribute to the outcome.

One tendency stands quite near to gambling, and yet is characteristically different, the delight in running risks, the joy in playing with dangers. Some races, in which the gambling instinct is strong, are yet afraid of high risks, and the pleasure in seeking dangerous situations may prevail without any longing for the rewards of the gambler. It seems doubtful whether this adventurous longing for unusual risks belongs to the Anglo-Saxon mind. At least those vocations which most often involve such a mental trend are much more favoured by the Irish. It is claimed that they, for instance, are prominent among the railroad men, and that the excessive number of accidents in the railroad service results from just this reckless disposition of the Irishmen. It tempts them to escape injury and death only by a hair. Where this desire to feel the nearness of danger, yet in the hope of escaping it, meets the craving for the excitement of possible gain, a hazardous investment of one's savings must be expected.

Yet it would be very one-sided and misleading if this group of emotional features were alone made responsible for the lamentable recklessness in the market. We must first of all necessarily acknowledge the tremendous powers of suggestion which the whole American life and especially the stock market contains. The word suggestion has become rather colourless in popular language, but for the psychologist, it has a very definite meaning. Suggestion is always a proposition for action, which is forced on the mind in such a way that the impulse to opposite action becomes inhibited. Under ordinary circumstances, when a proposition is made to do a certain thing through the mechanism of the mind, the idea of the opposite action may arise. If some one tells the normal man to go and do this or that, he will at once think of the consequences, and in his mind perhaps the idea awakes of the dangerousness or of the foolishness, of the immorality or of the uselessness of such a deed, and any one of these ideas would be a sufficient motive for ignoring the proposed line of behaviour and for suppressing the desire to follow the poor advice. But often this normal appearance of the opposite ideas fails. If they arise at all, they are too faint or too powerless to offer resistance, and often they may not even enter consciousness. They remain suppressed, and the result is that the idea of action finds its way unhindered, and breaks out into the deed which normally would have been checked. If this is the case, the psychologist says that the mind was in a state of increased suggestibility.

The degree of suggestibility, that is of willingness to yield to such propositions for action and of inability to resist them, is indeed different from man to man. We all know the stubborn persons who are always inclined to resist whatever is proposed to them and who do not believe what is told them, and we know the credulous ones who believe everything that they see printed. But the degree of suggestibility changes no less from hour to hour with the individual. In a state of fatigue or under the influence of alcohol or under the influence of strong emotions, in hope and fear, the suggestibility is reËnforced. The highest degree of suggestibility is that mental state which we call hypnotism, in which the power to resist the proposed idea of action is reduced to a minimum. But the chief factor in making us suggestible is the method by which the idea of action is proposed, and in psychology we speak of suggestion whenever an action is proposed by methods which make the mind yielding. It certainly is not objectionable to exert suggestive influence. Suggestions are the leading factors in education, in art, and in religion. The authoritative voice with which the teacher proposes the right thing has a most valuable suggestive power to suppress in the child the opposite misleading impulse. But surely suggestions can become dangerous and destructive. If actions are proposed in a form which paralyzes the power to become conscious of the opposite impulses, the voice of reason and of conscience is silenced, and social and moral ruin must be the result.

Everybody at once thinks of the endless variety of advertisements. An announcement which merely gives information is of course no suggestion. But if perhaps such an announcement takes the form of an imperative, an element of suggestion creeps in. To be sure we are accustomed to this trivial pattern, and no one completely loses his power to resist if the proposition to buy comes in the grammatical form of a command. If we had reached the highest degree of suggestibility, as in hypnotism, we could not read “Cook with gas” without at once putting a gas stove into our kitchen. Yet even such a mild suggestion has its influence and tends slightly to weaken the arguments which would lead to an opposite action. The advertisements, however, which the brokers send to our house and which are spread broadcast in the homes of the country to people who have no technical knowledge of stock-buying are surely not confined to such child-like and bland forms of suggestion. The whole grouping of figures, the distribution of black and white in the picture of the market situation, the glowing story of the probable successes with the bewildering hints of special privileges, must increase the suggestibility of the untrained mind and reËnforce powerfully the suggestive energy of the proposition to buy. The whole technique of this procedure has nowhere been brought to such virtuosity as in our country. The fact which we mentioned, that the new industrial and mining enterprises can offer shares small enough to be accessible to the man without means, has evidently been the chief reason for developing a style of appeal which would be unthinkable in the countries where the investors are essentially experienced business men.

But the skill of the prospectus with its sometimes half fraudulent features would, after all, not gain such influence if suggestion were not produced from another side as well, namely, through the instinct of imitation. The habit of making risky investments is so extremely widespread that the individual buyer does not feel himself isolated, and therefore dependent upon his own judgments and deliberations. He feels himself as a member of a class, and the class easily becomes a crowd, even a mob, a mob in which the logic of any mob reigns, and that is the logic of doing unthinkingly what others do. It is well known that every member of a crowd stands intellectually and morally on a lower level than he would stand if left to his spontaneous impulses and his own reflections. The crowd may fall into a panic and rush blindly in any direction into which any one may have happened to start and no one thinks about it, or it may go into exaltation and exuberantly do what no one alone would dare to risk. This mass consciousness is also surely a form of increased suggestibility. The individual feels his own responsibility reduced because he relies instinctively on the judgment of his neighbours, and with this decreased responsibility the energy for resistance to dangerous propositions disappears. Men buy their stocks because others are doing it.

But finally, may we not call it suggestion, too, if the individual even tremblingly accepts the risks of perilous deals, because he feels obliged to grasp for an unusually high income in order to live up to the style of his set? Of course there is no objective standard of living if we abstract from that where the income simply secures the needs of bare existence. Above that, everything depends upon the habits of those around us. If the community steadily screws up these habits, makes life ostentatious for those of moderate means as well as for the rich, hysterically emphasizes the material values, the will to be satisfied with the income of safe investments has to fight against tremendous odds. The truly strong mind will keep its power to resist, but the slightly weak mind will find the suggestion of the surrounding life more powerful than the fear of possible loss. If all the neighbours in the village have automobiles, the man who would enjoy a quiet book and a pleasant walk much more than a showy ride will yield, and spend a thousand dollars for his motor car where fifty dollars for books would have brought him far more intense satisfaction. In no country have fashion and ostentatiousness taken such strong possession of the masses, and the willingness to be satisfied with a moderate income is therefore nowhere so little at home.

Yet neither gambling and taking risks, nor suggestibility and imitation, are the whole of the story. We must not forget the superficiality of thinking, the uncritical, loose, and flabby use of the reasoning power which shows itself in so many spheres of American mass life. It is sufficient to see the triviality of argument and the cheapness of thought in those newspapers which seek and enjoy the widest circulation. It is difficult not to believe that fundamentally sins of education are to blame for it. The school may bring much to the children, but no mere information can be a substitute for a training in thorough thinking. Here lies the greatest defect of our average schools. The looseness of the spelling and figuring draws its consequences. Whoever becomes accustomed to inaccuracy in the elements remains inaccurate in his thinking his life long. If the American public loses a hundred million dollars a year by investments in worthless undertakings, surely not the smallest cause is the lack of concise reasoning. Wrong analogies control the thought of the masses. Any copper stock must be worth buying because the stock of Calumet-Hecla multiplied its value a hundredfold. But the irony of the situation lies in the fact that, as experience shows, those who are the clearest thinkers in their own fields are in the realm of investments as easily trapped as the most superficial reasoners. It is well known that college professors, school teachers, and ministers figure prominently on the mailing lists of unscrupulous brokers, and their hard-earned savings are especially often given for stocks which soon are not worth the paper on which they are printed. Sometimes, to be sure, this unpractical behaviour of the idealists really results from an unreasonable indifference to commercial questions. The true scholar, whose life is tuned to the conviction that he has more important things to do in the world than to make money, readily falls into a mood of carelessness with regard to the money which he does chance to make. In this state of indifference he follows any advice and may easily be misled.

But it seems probable that the more frequent case is the opposite one. Just because the teacher and the pastor have small chance to save anything, they give their fullest thought to the question how to multiply their earnings, and their mistake springs rather from their ignorance of the actual conditions. They think that they can figure it out by mere logic and overlook the hard realities. They resemble another group of victims who can be found in the midst of commercial life, the over-clever people who rely on especially artificial arguments. They feel sure that they see some points which no one else has discovered, and while they may have noticed some small reasonable points, they overlook important conditions which the simpler-minded would have seen. They know everything better than their neighbours, and whatever their friends buy or sell they at once have a brilliant argument to prove that the step was wrong. They generally forget that the listener must be suspicious of their wisdom, as they themselves have never earned the fruit of their apparent wisdom. They all, however, may find comfort in the well-known fact that hardly any great financier has died, not even a Harriman or a Morgan, without there being found in his possession large quantities of worthless stocks and bonds. But the variety of intellectual types, the careless and the uncritical, the over-clever and the illogical thinkers, could easily protect themselves against the dangers of the shortcomings in their mental mechanism if their minds had not another trait, which, too, is more frequent in America than anywhere else in the world—the lack of respect for the expert.

The average American is his own expert in every field. This is certainly not a reproach. It supplies American public life with an immense amount of energy and readiness to help. Above all, historically, it was the necessary outcome of the political democracy. In striking contrast to the European bureaucracy, any citizen could at any time be called to be postmaster or mayor or governor or member of the cabinet. A true American would find his way, however complex the work before him. That was, and is, splendid. Yet the development of the recent decades has clearly shown that the danger of this mental attitude after all appears to the newer American generation alarmingly great in many fields. Civil service has steadily grown, the influence of the engineer and the expert in every technical and practical field has more and more taken control of American life, because the go-as-you-please methods of the amateur have shown increasingly their ineffectiveness. Education has slowly been removed from the dilettantic, unprepared school boards. The reign of the expert in public life seems to have begun. But in private life such an attitude is still a part of the mental equipment of millions. They ignore the physician and cure themselves with patent medicines or mental healing: they ignore the banker and broker and make their investments in accordance with their own amateurish inspiration. They pick up a few data, ask a few friends who are as little informed as themselves, but do not think of asking the only group of men who make a serious, persistent study of the market their lifework.

They call this independence, and it cannot be denied that some features of our home and school education may have fostered this tendency not to submit to the judgment of those who know better. They have grown up in schools in which the kindergarten method never stopped, in which they were permitted to select the studies which they liked, and to learn just what pleased them; they were brought up in homes in which they were begged and persuaded, but never forced to do the unwelcome; in short, they have never learned to submit their will to authority. It cannot be surprising that they fancy that it is the right kind of mental setting to feel one's self the ultimate authority in every field, and it would be harmless indeed if the patent medicines would really cure as well as the prescriptions of the physician, and if the wildcat schemes would really yield the same safe income as those investments recommended by the reliable banker. It is then, after all, no chance that this commercially clever American nation wastes more in anti-economic fancies than any other people on the globe. It is the outcome of psychological traits which are rooted in significant conditions of our educational and social life. Yet as soon as these connections are recognized and these reasons for waste are understood, it ought not to be difficult fundamentally to change all this and to make the savings of the nation everywhere really sources of national income.