There are enough good investments regarding which full information may be had without wasting time over those of uncertain value, and facts regarding which are withheld from the searchlight of publicity.

At times a man but more frequently a woman says that there is a very small sum of money to live on, and that it is extremely necessary to get as high a rate of interest as possible, consistent with safety. The conscientious banker often advises putting the money in some good savings bank, or buying what are known as high grade investment stocks or bonds, and which return from 3% to 4% interest. They are the next degree removed from Government bonds in safety. The customer will immediately say that he cannot possibly live on such a rate of interest, that he must have 5% or 6%. In spite of all arguing and urging upon the part of the banker he will insist upon this interest rate. The former, against his better judgment, and contrary to his strong advice, will select, to the best of his knowledge and belief, a security which will return this desired rate of income with as little risk as possible, knowing, all the time, that no matter how earnestly he tries there is quite an element of risk. Finally, the investment is made; all goes serenely for months, perhaps years. The banker may do as well as he can to "keep track" of this investment, and often succeeds in persuading his customer to dispose of it in time to forestall a loss, and, possibly, secure a profit. Frequently, in spite of his best endeavours, a loss will occur, and then his troubles begin. He will wish a dozen times that he had absolutely refused in the beginning to invest the money; he will likely at the time have requested the man not to invest it through him. The customer may have replied: "Please advise me; to whom else can I go for advice?" The latter is apt to remember very little of this. The banker is to blame from the other's point of view; he ought to have known that something was going to happen to this security, and sold it. He should have been more than human in his ability to foresee a loss; he has neglected his duty. There have been numerous cases where so little did the investor remember the conversation which took place at the time of making the investment, that he has heaped upon the banker the unjust accusation of having urged the purchase of the security.

Let the investor assume his or her proportion of the responsibility in case of loss, and give proper credit to the banker in event of extraordinary profits.

Remember, always, that your investment banker is not infallible; for it is not possible for any human being to carry continually in his mind facts in relation to the multiplicity of securities handled by him. It is not to be expected that

he can be constantly and at all times fully acquainted with every detail and ready, upon call, to decide upon the merits of any question raised by his clients. Especially, in times of financial panics, is it impossible for him to give many issues which have passed through his hands proper attention. It is natural that occasionally some one must err, and it is fair that the client should consider that he is only one among hundreds and, perhaps, thousands of other clients which the banker has to consider.

Now and then the purchaser of a security, particularly a bond, may not have money available for investment for some little time. The banker, as an inducement to him to make a purchase, may offer to sell the bond deliverable at some later date to be agreed upon, merely charging the purchaser the accrued interest; i.e., the rate which the bond bears until the date upon which he makes payment. Suppose, however, the matter is reversed, and the purchaser requests this accommodation on the part of the banker. In the meantime, interest rates market prices for money-advance considerably, so that it is evident that the banker must have been losing money in "carrying" the bond for the customer at the "accrued interest " rate. Under these circumstances it would be perfectly proper, and really morally obligatory, on the part of the investor to offer to pay an additional rate of interest, for the time, sufficient to compensate the banker.

In considering the advisability of selling a security, the original cost of it should not be given too serious consideration, especially if the cost were such as to show a loss. If it is a proper time to dispose of it, the cost should be left out of the question. Ask yourself whether or not you would buy at the present quotation, and if, for good reasons, you can decide in the negative, is it not a fair argument to sell? This does not mean that money is not often made by waiting, for all facts in relation to any particular security have to be taken into consideration in thinking of selling it as above indicated, but the mere fact that it costs more than you would give for it is no reason for delaying its sale.

That is the point it is desired to make clear, for probably much unnecessary loss has been incurred by those unwilling to take a small one, but who have held on and then taken a greater one in the end. And all just because they allowed themselves to be influenced by the original cost.

When you purchase a stock, bond, mortgage, or whatever it may be, read it; see what conditions it contains. You may find therein some clause detrimental to your interests. It would not be hard to cite cases in which the holder of some stock certificate has suddenly discovered that it carried con

ditions, plainly stated, had he taken the pains to look, which entailed hardships upon him.

It is not unusual for an investor to spend hours and, perhaps, days in patient thought and study in seeking what he deems a safe purchase, and then, at the last moment, spend scarcely any time in the scrutiny of the paper itself.

When a banking firm buys an issue of bonds, or similar security, from any corporation which is not by law compelled to furnish public statements of its earnings from time to time, or where the corporation is of such magnitude that it is customary to furnish a statement of its earnings to the public, such, for instance, as the United States Steel Corporation, it is important that a contract be executed between the corporation placing its securities and the banking house purchasing the same, whereby the latter shall receive semi-annually or yearly sworn statements of the earnings of the company and its financial condition during the time which the issue of securities may be outstanding. Furthermore, that the banking house shall, for a like period, have access to the books of the corporation at any time for the purpose of auditing its accounts and verifying its statements.

The reason for this is perfectly clear: It affords a means of protection to the bondholder, for in case the earnings of the property during the life of the security seem to be falling off, it will, by the banking house receiving a statement of such earnings, be made known to it and afford an opportunity for self-protection. It is no more than right that the parties lending the money, by which the corporation is able to operate, should be in possession at all times of adequate information to judge whether or not the property is being properly managed.

Remember, at all times, that nothing is more sensitive to conditions and impressions than the security market. This is well illustrated in the actual happening of a woman who possessed $5,000 in bonds of a small issue in one of the New England cities. The issue was a perfectly sound one, but was held closely by investors, and the bonds seldom offered for sale. The woman desired to dispose of them, and went to her banker in New York City and asked him to obtain a bid. He, naturally, put himself in touch with one of the local brokers of the city wherein the corporation itself was located. This broker went from bank to bank and from banker to banker to get the best bid obtainable. The woman, in the meantime, had gone to not less than six other bankers in New York with the same request. They, in turn, had each sought some local broker in the New England city, and, each pursuing like tactics to the first mentioned, it was not long before there seemed an avalanche of the bonds of that particular cor

poration. It seemed that there were more bonds for sale than the outstanding issue. The result was that intending purchasers became suspicious and all bids were withdrawn. The woman was unable, for the time being, to obtain any market whatsoever.

In this connection it may be pertinent to say that in the case of an issue of securities unknown in the market where they are offered for sale, the fact of not being able to find a purchaser does not argue that anything is wrong.

In comparing earnings, one month with another, always compare with the corresponding month of the year preceding, as that is the true test. If the corporation is one of long standing, it is advisable to examine into its earnings during a past period of business depression, and to see how it weathered the storm."

In the placing of money for investment purposes, in addition to the foregoing, these are some of the general principles which should be considered:

The standing of the men in charge of the corporation; the location of the property and the character of the country upon which it is dependent for its business; especially is it increasing in population and wealth, or the reverse? If it is a municipal bond that is being considered, it is not advisable to place too much confidence in a municipality which is so located as to be entirely dependent upon lumber business, oil wells, or some special form of mining; that is, a stability, not likely to be furnished under such conditions, is needed. An agricultural section is far better and more permanent than gold mining. A study of the earnings has already been advised.

Present competition, or the likelihood of the same in the future, is very important. Is the corporation charging excessive rates so as likely to invite competition? Are its earnings based upon patents which may be approaching expiration?

It goes without saying that the condition of the money market at the time of purchase must always be considered.

But when all is said, most business must rest upon faith in someone, and, therefore, the character of your banker is allimportant.

This chapter thus far has been written mainly with the idea of assisting those desiring to make careful and conservative investments. The author, nevertheless, understands that there are, and always will continue to be, those who speculate, and, possibly, some of the essential points in relation to speculation may be acceptable, and here follow.

Stock market prices, which, like the ocean, are never at rest, are influenced by many forces. If one is to be even an

occasional buyer or seller in the securities of the speculative world, he cannot have too clear an idea as to these factors. Monetary conditions, business conditions, and stock market manipulation, together with the political outlook, both domestic and foreign, are important subjects for study. Always remember that, although values are largely determined by business conditions, prices may, for the time being, move at variance with basic principles. Prices in the long run do, nevertheless, follow the course of existing values. (Many of the subjects mentioned in this connection will be found treated in the main part of the book, so they may be lightly touched upon here.)

It is evident that "business conditions" is a broad subject, but there are certain underlying principles which may be taken as an infallible guide, namely:

First: The crops of main importance the principal of which, grain and cotton, have a tremendous influence upon business prosperity.

Second: The iron and steel industries. It is well understood, and almost a tradition, that when these trades are prosperous, other departments of industry are fully occupied. The reverse is equally true.

Third: Watch the railroad earnings. They are a singularly good index of the times. Busy railways and good earnings mean work for the steel companies, car and locomotive builders, etc. Beware of the continued steady decline from month to month of these figures. The rise and fall in stock prices have always closely followed the rise and fall in railroad earnings.

Fourth: Study the bank clearings. They reflect business conditions wonderfully well. The clearings of the country at large are better to follow than those of a particular city which may be temporarily affected by a speculative craze.

Fifth: What are known as "swings" from prosperity to depression and the reverse. It is a well known fact that the business of every country passes through alternate periods of rising prices and prosperous times and then falling values and hard times. It behoves one to always estimate, as well as may be, at about what point in one of these cycles he happens to be.

Monetary conditions" have reference to the supply of, and demand for, money; the effect of an increasing supply upon the rise in prices of commodities; and the fact that low money rates may encourage speculation. Money is the representative in value of all things traded in, and the scarcity of it does not tend to improve business conditions, yet, at the same time, very low money rates may argue poor business, as it shows a lack of demand. The comparative study of the