know: the ordinary rules to safeguard one's investing which the experienced man applies almost unconsciously in making his investments. To the latter it hardly occurs that there are thousands who do not even know the desirability of a sinking fund, or that it is generally considered better to have a bond payable in gold than in lawful money, etc. I have known a banker to spend more than an hour in explaining the meaning of "accrued interest " to a woman, and a school teacher at that. Such instances are by no means rare.

A book which will help to educate the investors will be not only, I hope, of value to them, but also to the bankers, who are necessarily busy men, by having made it possible to do business with a greater dispatch with such as may have received some benefit from its use.

Many investment bankers doubt the wisdom of doing business at all with the average woman from the fact that so much time is consumed in explanation of details, and often from the lack of knowledge which many women have of the most common business rules, and which, either from courtesy or charitableness, the banker often allows her to break, to his own pecuniary loss. There must be necessarily more women who can find need for the book than men, yet it is hoped that there will be among the latter many who will find here and there in its contents something previously not clear to them.

The necessity, perhaps, for a little financial knowledge on the part of women is not so urgent as formerly. In early days, the strenuous domestic cares left them little time, if any, to the care or thought of money, and it is not to be wondered at that the husband made no attempt to educate his wife in such a direction. In the present day of greater wealth and numerous servants to lighten the domestic burdens of the housekeeper, it has become quite customary for the woman of the house to have a bank account, and check against it for personal and household expenses. Consequently, to a limited extent, many women of late years have been gathering experience, but, step by step, with this slight growth of knowledge, have arisen more and more complicated questions of finance, making it, year by year, harder to grasp even a fair knowledge of the handling of money, with the many intricate stock and bond issues now upon the market. Although this book will endeavour to cover, in a brief way, such simple subjects as the making of a draft, drawing a check, etc., yet it is intended to cover financial and investment matters in general, and to set forth in a clear light their many ramifications.

No attempt to lay down fixed rules to lead the investor to certain success finds its way into these pages; rather, it is the desire to make clear certain dangers which the investor should

avoid, and establish principles which should prove helpful in reaching a fair idea as to the value of securities.

The writer has made an earnest effort to make clear some of the many intricacies which surround the complicated nomenclature of bond issues. It is not surprising that he received a letter, not long ago, from a young man, unknown to him, about to connect himself with a Southern bond house, asking if there were not some book to which he could turn to put him on horseback and start him out of the wilderness, as it were, in regard to the complexity of names attached to issues of securities.

The writer cannot undertake to give every possible combination of names. For instance, there is a "general mortgage bond," " sinking fund bond," a "first mortgage bond," and so on, all of which will be separately described in the text, but to undertake to give a fair definition for such possible combinations as "first, general mortgage, sinking fund bond," would lead to an increase in the number of subjects too great to contemplate.

Again, it would not be safe to elucidate all the laws and legal technicalities which may surround an issue. It is supposed that every reputable bond house shall have taken the legality of the issue into consideration before offering it for sale; and in this connection the reader is asked to turn to the subject headed "Attorney's Opinion." Reference to issues in general can only be made, and the value of securities referred to from the same standpoint, for there must be many common stocks which, in the nature of things, frequently sell higher than the preferred of the same company; or the first mortgage bonds of one company may not sell at as high a price as the third mortgage bonds of another. All these facts must be taken into consideration, and the province of the writer is only to undertake a reasonable interpretation and definition of each security issued within the understanding of the least experienced.

It is not the intent here to treat of mercantile affairs, but upon financial matters and investments as dealt in by banks; money and the handling of it, etc. The meaning of words and phrases as defined herein is as understood in the world of finance.

It is not advisable to follow accurately the nouns, verbs, or adjectives, as the same are given in a dictionary or an encyclopedia, but select, without regard to their grammatical position, words used commonly in financial matters. In some cases definitions will diverge widely from those of an encyclopedia and will usually not give all the possible uses of a word, but only such meanings as relate to the handling of money and securities.

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The effort has been made to arrange all subjects alphabetically under the headings by which they are most commonly known. If the reader is unable to find information upon the subject sought, let him endeavour to think of some other term, word, or arrangement of words, which might refer to the same subject, with the hope of locating it in some other part of the book.

It will be useless to attempt to cover every conceivable financial term used in this country and Great Britain, or in the English-speaking world in general, nor can it be possible to give all the intricacies of the law and the rights of the lender, debtor, indorser, etc., but merely to cover those most usually come in contact with in daily financial transactions or in reading newspapers. And, as regards the rights of the lender, etc., to give the most common principles to guide him. This is not intended for an advanced book on finance, for there are separate books which cover nearly every general subject. It is more for daily reference and a guide to those greatest in need of information.

There will naturally occur to some, now and then, points not covered. To such I would say that the Encyclopedia Britannica leaves much to be desired, and that the aim here is to produce a simple "handbook" of most commonly used expressions and most needed rules to aid the beginner in the handling of money and investments. To enumerate in detail all the many rules that the banker himself has to exercise, first and last, in his own larger experience of buying and selling, would be but to breed confusion.

The names chosen by different corporations for new security issues are sometimes strange and conflicting, and very often misleading; again, entirely improper, and it is not surprising that a young man entering the banking business seeks relief from the confusion. It is human nature, a fact well appreciated in the financial world, that there is a good deal in a name, leading to the giving to many security issues titles to facilitate their sale.

The names of different classes of securities are so misused, sometimes purposely, the different meanings of the same terms overlapping one another, that it will not be strange if some readers of this book take exceptions to the definitions given herein regarding different security names.

A bond is not technically a "first mortgage," "second mortgage," etc., but secured by a "first mortgage," or second mortgage," on the property, but throughout this work the latter meaning will, for the sake of brevity, often be taken for granted, and the former wording used. There are so many securities which are commonly referred to in Wall and State Street parlance by what may almost be called

nicknames, or, at least, a great abbreviation of the full title, that the most commonly used ones will be found throughout the book, alphabetically arranged. To endeavour to cover this ground fully would add too greatly to the size of the work. A sample of the above would be that of the Chicago, Burlington & Quincy R. R. Co., which is known by all of the following: "Q," " B. Q.," "C. B. Q.," "Burlington," etc.

The statements made herein are compiled from reliable sources, mainly official, and are the latest obtainable. Although the author has left no stone unturned to verify his information, he cannot suppose that this work goes forth without errors, but it is hoped that those which exist will prove unimportant.

To certain officials in various departments of the United States Government; to many well-known bankers and brokers, experts and specialists in their professions; to several painstaking, resourceful lawyers of known reputation; and to many others, busy and successful men in their separate walks in life, I wish to express my deep sense of obligation for most able and necessary assistance in the preparation of this work. To them will be largely due whatever successes may befall it, and to the author its shortcomings.

II

INVESTMENT AND SPECULATION

Suggestions

THE tremendous and invincible force of prosperity which spread throughout our States, beginning in 1897, the like of which no other nation has ever experienced, has enabled many corporations, which met financial disaster during the middle of the "nineties," to regain a sound moneyed footing. Many securities of such corporations, which were discredited in the minds of investors, have since been eagerly sought for by the most conservative and at very high prices. People who, losing faith in the future of this great food producing country, threw over their investments at enormous losses, must look back with wonder upon their timidity, and feel that until the United States has exhausted its resources, a condition which at least this generation need give no concern, the swing of the pendulum to hard times and low prices furnishes no time to sell standard securities, but rather a time to buy. Yet this is contrary to the custom of the small investor; he loses confidence and sells at panicky prices, and regains faith just in time to buy at inflated prices. Now, in all such times, there must be some who reap the benefit of this ill-advised selling and buying; they are the large investors; bankers and brokers, who trade for their own accounts; and those associated in the management of our corporations and who can judge the future of their earning capacity. How is it so many rich men grow richer? Does it ever occur to the small investor that no new money actually comes into existence by the selling of a thousand shares of stock at twenty dollars per share over the cost? Yet such a transaction enriches some one $20,000. Not even the equivalent of money, such as the farmer, the mechanic, the miner, etc., produces, results from such a buying and selling. Some one must at some time have produced the money equivalent which pays the $20,000 profit. It is the toiler who really, by his labour, creates the money equivalent to buy the stock. Recognizing, therefore, how many

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