T H E A R T O F

W ISE IN V EST IN $

A SERIES O F SH O RT ARTICLES
ON I NVES TMEN T VALU E S ,

PO INTIN $ OU T THE ESSENTIAL

C H A R A C T E R I S T I C S O F SA FE
IN V ESTMENT SEC U RITIES W ITH ,

A R E V I E W O F THE FI N A N C I A L
P I T FA L L S INTO WHICH
S U PE R F I C I A L E $ A M I N A T I O N
I N E V I T A B L $ L E A $ S

PU B L ISHE$ B$

MOO$ $ PU B L I SH I N $ CO .

35 NASSA U STREET ,
N E W $ O R $
 C OP$ RI $ HT , 1 9 4,
0 B$

MO O $ $ PU B LISH IN $
NE W $ O R$
 PR EFA C E

While the p o p ular i mpression is p robably

the reverse yet it i s an u n deniable fact that
,

a far vaster sum of money i s annually lost

i n thi s country through unwi se in vestment ,

than through p ure speculati on Wh ile m any .

fortunes are constantl y jeopardi zed and d i s

si at e d
p through what i s known as specula
t i o n i n s t ocks bonds gra i n futures and like
, ,
-

ventures y et the many sums large and

, ,

small which annually leave the pockets

,
of

actual investors are far greater i n amou nt .

Indeed I would almost say that the losses

,

$
through unwi se i nvestment are eas ily t en

fold the losses occasion e d t hrough mere

speculation on the e x changes .
 PR E FA C E

And furthermore ,
the losses i ncurred
t hr ough unwi se i nv esting are far more im

p ortan t t o the co m muni ty at large ; f or while

speculative losses are in a sense anticipated ,

or at least partly anticipated the losses,

through mistaken investm ents are usually

unexpected and unprepared for . Specula
tive losses O ften represent the loss of money
easily gained either through former
,
sp e c u

lation or from other sources but the aver

,

age loss of the investing public is generally

a loss of hard earned or industriousl y
-
ac

cumulated savings ; and therefore such

losses are felt fa r more deeply by the com
mu nity .

The art of wise investing involves two

$
primary motives . The first is to place one s
principal where it will be entirely secure ,
 PR E FA C E

a nd the seco n d t o gain as large a per

,

centa ge of return as possible without in the

least disturbing or lessening the security of

th e principal . The moment the status of

the principal i s changed f or t h e p urp ose

of enhancing the rate of return the trans
,

action ceases to be a p ure in v estment and

becomes more or less of a specu latio n .

Thus analyzed
,
in i ts s im p lest form we may ,

put it down as a xi omatic that o nl y those are

$

legitimate investments where the primary

of
$
motive is the safe secur in g one s prin
c ip al and the rat e of return thereon is
looked upon as secondary . A s p eculat i on ,

on the other hand i s where the desire for

,

large profit is so strong that the safety of

the principal becomes in e fie ct a minor con

sideration . That i s to say ,
th e person in
 PR E FA C E

vesting or speculating may regard h is p rin

c ip al as secure but i s wil ling to place it at

considerable risk i n order to increase hi s

p rofit . The securing of the principal t here,

fore is the first and chief matter

,
to be c on

sid e r e d in investing money .

L ooked upon i n this ligh t i t w ill be seen

that the matter of i nvesting money wi sely
i s a mos t i mportant as we l l as a most diffi

cult a rt , and therefore well worthy of c are

ful examin ation . The i deas and O p in ion s
expressed in the followi ng pages are the
$
concrete result of many years experience
and study of Wall Street condi tions and
metho ds ; and wh ile it may appear to s ome
that the writer is t oo conservative in his
attitude towards investin g methods in gen
eral yet careful thought should convince
,
 PR E FA C E

e very reader that i t is the part of safety and

prudence to be securely on the side of c on

s e r v a t ism in Wall Street investing rather ,

than the reverse .

In the work of compilation the valuable

co -
operation of Mr . $ ohn F Hume author
.
,

$
of a book now
,
ou t of print entitled
,
The
$
Art of Investing ,
is hereby publicly ac

knowledged .
Th e A rt O f W ise In v e s t in g

I .

U nless he has had much prev i ous e x

p e rie n c e , the prospecti ve investor wh o

wishes to put hi s mo n ey to work through

Wall Street channels will be c o nf ront ed at
,

the v ery outset wi th the question of

$
safety . $ nowing only more or less
defini tel y that he ought not e xpect a return
,

'

of more than 4 per cent to . 5 per cent . if h e

exp ects to place his money securely ,

he

naturall y seeks mor e expert advice from

a banker broker ,
or other dealer i n i nvest
ment securities . And he is wi se in do in g

13
14 THE ART OF

this provided he exercises good judgment

,

in the select i on . But brokers and dealers

in investment securities are of course not , ,

infallible ; the ir judgment is sometimes

biased and they
,
m ay, f or on e reason or

other give unsound advice

,
. Hence it is all
the mo r e necessary that the investor should
inform hi mself regarding the merits of a
given security as well as train
,
hi mself in
the art of analyzing investments in general .

The t r uth i s that while there are certain

fix ed rules for pr oper guidance yet every ,

bond must be judged by itself in order to

be analyzed aright . For instance a man ,

$
may be advised to invest only in first mort
gages ,
$
and by putting this limitation upon
his field o f investment thereby insure its ,

safety . Bu t such advi ce applied broadly

, ,
 WISE I NVESTING 15

is essentially unsound . A fourth fi f th

,
or

tenth mortgage on some properties m ay be

far more secure than a first mortgage on

o thers . For instance the Reading Company

,

4 s, selling at 1 00, are a much safer security

than were the first m ortgage bonds of the
C entral i a Chester R . R .
, and ye t t he f or

mer are an 8t h mortgage on parts of the

mainline o f the Rea di ng system and are a
first mortgage on no part of the property .

Yet they are well secured while the other ,

bond de f aulted early in its life an d it s h ol d e r s

were obliged to sacrifice a large part of their

principal in the re organization which f ol
-

lowed the default . Thus it w ill be seen

that to advise the investor mere ly to con
fin e his investments to first mortgages may
be most mi sleading . And yet m an v of the
16 THE ART OF

victims of such results never seem to gro w

any wiser .

Another unsafe method of judging the

safety of bonds is ,
to assume that b ecause
t hey are secured on part of a large rai lroad
$ $
system and underlie on e or more issue s
of secondary bonds that the i r secur i ty i s
,

absolutely assured . T hi s like the former

,

argument cont a ins s ome vi tal flaws and

, ,

while it holds good in the majori ty of

$

i nstances ,
i f followed in others ,
brings
v ery disas t rous results . Many large and
i mportant railroad corporations absorb
t r ibutary or competing li nes under on e plan
or another but they do
,
n ot al ways guar
a ntee t he securities of these lines . Bond
$ $
i ssues are assumed , according to the
s tatements c i rculated but unl e ss they hav e
,
 WISE I

been speczfic al ly gua ra nteed by the a c qu ir

ing corporation i t does not n ecessar ily fol
,

l ow that the cre di t of the latter i s back of

the security at all . The acqui red l ine may

turn out an unprofitable and los ing in

vestment wi th the resul t that the larger

, or

controllin g lin e will want to either unload

its burden or scale down the ob ligations of

the branch to a sum approximately less than

the latter is currently earning . There are
many methods whereby this can be done as ,

has been proven many times . It is vi tal ,

therefore that
,
th einvestor should base hi s
entire judgment of v alue on the property
itsel f regardless
,
of the parent co m pany ,

unl ess indeed the latter has a b sol utel y as

sumed and guarante ed the pr i nci p al and
int e rest of the bond .
18 THE AR T OF

A third error which is very common is to

ass u me that because a bond i s li sted on one

or more of the stock exchanges it is there
,

f ore sa f er or in better sta nding than other

wise . Such a notion is entirely unsound as ,

there are far more bonds of th e highest

grade and of the best security traded in on

the various markets outside of the exchanges

themselves . The chief advantage of a
security being listed on an exchange is th at
it thereby secures a fixed quotation but the ,

f act of its being listed does not bear upon

its sa fety in any way . While it is true that
many of the best secured bonds and stocks
are listed on the exchanges it i s also true ,

that many of the least secure are listed as

well .

In contemplating an i nvestment in a
20 THE ART OF

p lac i ng the ac tual movable p rope rty of the

c omp any . Bu t there i s another asset be

s ides its rails and equipment that makes

r ailroad property valuable . This i s its lo
cation its e x clusive r ights
, of way and ter
minal sites or privileges . And it is from
these latter that fl ow i ts chief earning
power . The 5 00 od d miles of railroad on

the New $ ersey Central system may not

represent much more movable property
than a like mileage of railroad in Mexico ,

and they may not have originally cost much

more to build . But the vast diff erence in
value Wi ll be found in the location in the ,

value of the land , a value whi ch has been

creat e d by the influx or growth of O
p p ul a

tion . This is such an important fac t or that

the value of a prope rty is at once eff ected i f
 WISE INVE STING 21

a t endency towards more rap i d growth ap

pears while,
it at once falls in cases where
the contrary tendency develops .
*

The right of way or site value is there

f ore the first feature to bear in mind i n
a nalyzing the permanent earning power or

value . And i t must be borne i n mind that

it is the perma nent or a verage earni ng
, ,

power rather than the possible tempora ry

i ncome that is to be considered . By per
m an e n cy we mean a matter of generations
a nd not of years . Most railroad bonds run

*
( T hi s e fi e c t of
population on land values
a n d on all sub values — every value being
-

—
subsi di ary to land value is brought ou t
most clearly and scientifically in a small
b ook recently issued by Richard M Hurd .
,

P resident of the L awyer s Mortgage C O

$
,
.

New York entitled Pri nciples of C i ty

,
$

—
iL and Value s )
$
22 THE ART OF

from 5 0 to 1 5 0 years and the inv es t or must

natural l y be assured that there will not
li kely be a real depreciation in the property ,

if properly maintained in the generation s

,

to come . His first thought then must be to

ascertain if the influ x of population around

and along the l ines of the property is likely
to continue indefinitely and at the same , ,

time if the value

,
of this and the surround
ing land is such that the creation of a rival
right of way is ou t of the question . In othe r
words his fund a mental asset ( the site )
,

must be practically exclusive for it i s t h e ,

exclusiveness that gives it most of it s value .

Having assured himself as to this ,

h is

nex t care will be to see that the probabl e

-

average earning capacity of the p ropert y i n

the poorest times is well in e x cess ( 5 0 p e r
 WI SE INVESTING 23

cent at least) of all requi remen t s f or

.

interest on t hi s mortgage and all p ri or

charges as well as
,
f or f ul l maintenance of

the p roperty in every res p ect . The in

v e st iga t ion of t hi s phase of the enterprise

is f r e qu e n t l v a difficult one as reports and ,

income accounts are so often m isleadin g in

arrangement and make -
u
p that the careless
investor is som etimes deceived by an elab
orate display of figures which may mean
*
very little .

( Every investor would do well to make

*

himsel f f amil iar with a little book enti tled

$
The Anatomy o f a Railroad Report by ,
$

Thos F Woodlock editor of the Wa l l

. .
,

S tree t journa l It is published in the well

.

known Nelson s Wa l l S treet L ibra U) T hi s

$
.

little book written so that the unini tiated

,

as well as the exp ert can comprehend goes ,

thoroughly into the details of ra ilroad a o

counts and reports ) .
24 THE AR T OF

But eve n t hough t he i nves t or has thor

oughly informed himself r e garding the
above characteri stics there are many other ,

uncertainties which are to be avoided or

overcome . However if he has been careful

,

to see that the condi t i ons described abo v e

are all present i n a given inves t ment ,
hi s

chances of losing his money wi ll be reduced

to a minimum . If
. on the other hand he ,

neglects these precautions and adopts other ,

rules f or analyzing the security or puts his

trust in the say $
-
so of t hi s or that author
ity then he stands
,
in great danger of sooner
or later coming to grie f as will be shown in ,

the f ollowing pages .

Many years ago the careless legislation of

many of t he States p ermi tted c orp orat i on s

to decide f or them selves the amounts of
 WISE INVESTING 25

obligations they might put ou t , and there

fore it was no wonder that the pri v ilege was
abused and the making of shares and bonds
, ,

the latter represented to be amply secured

by mo rtgage li e ns were car ri ed ,
to cri minal
excess . One illustratio n wi ll suffice
ol d
$
The Arkansas Central Railway Com
p any located in the State
,
of Arkansas ,

built onl y fort y eight miles -

of its pro
ec t e d
j road . The road was of narrow guage ,

with very light iron ,

and in every way
cheaply constructed . It cost less than ten
thousand dollars per mile including equ ip ,

ment . As has been the case with most of

companies bu ilding ra ilways in new coun

tries help
,
in its behalf was asked from th e

communities to be ,
b e n e fit t e d, and their
bonds amounting to nearly half a million
,
26 THE ART OF

dollars were given it by the counties c ities

, , ,

e tc . U nder a sta t ute providing f or ai d t o

railroads when their beds could be u ti li zed
f or levee purposes the company got $ 1 6 0
, ,

000 of State bonds . U nder another statute

$
it got as a loan from the State the latter s
, ,

bonds to the amount Of whic h

were to be a first lien upon the property .

After such abundant assistance it would ,

have appeared hardly necessary for the

c ompany to put out obligations of its own .

However it proceeded to market and issue

,

its own debentures to the amount of

of which purported
to be secured by first mortgag e a ,
re
p re

s e n t a t ion that for reasons already stated

, ,

was not correct . In addition a considerable

a mount of stock certificates was issued .
28 THE ART OF

$ $
ments and municipals ,
were steam rail
road bonds and stocks . But we now have
stocks and bonds upon the market r ep r e

senting nearly all conceivable kinds of

p roperty ,
i ndus t rial and manufac t uring
companies ,
telegraphs ,
telephones ,
gas ,

electric ligh t and traction companies ,

water works
-
,
bridges ,
oil and gas we l ls ,

factories and mi lls of e v ery description ,

patent rights of all sorts steamboat lines , ,

apartment houses ,
and even cemeteries .

And not only are properties o f many kinds

used to i ssue bonds on , but many k inds of

bonds are O ften issued upon the same

properties . Thus we find among ou r ra il
roads and other corporations n ot o nl y first ,

second and third mortgages but income ,

bonds debentur e s convertible bonds con

, , ,
 WISE INVESTING 29

sol i dated bonds redemptio n bonds renewal

, ,

bonds ,
terminal bonds ,
divisional bonds ,

$ $
sinking fund bonds ,
bl anket mortgage -

bonds ,
collateral trust bonds , equipme nt
bonds and bonds
,
unt il they
ad na usea m

lap and overlap in seemingly endless c om

pli cation . Not that merely but , on e issue
of bonds is sometimes made the basis of

other issues . Indeed ,

on e of the m o n ey
making de vi ces of the time is the formation
of companies that issue t h e ir b on d s on the
security of the othe r people s bonds that $

they have purchased ,

either yi el di ng a
higher rate of interest or O btained at lower
pri ces than they e xpect to realize for the i r
issues . There seems ,
in fact ,
to b e no

l i mi t to the production of securit ies that

ar e sp r ead befo r e the cap italist s . There
30 THE ART OF

never was a time when it was so easy to

invest money and to lose it . Of the s c our

i ties that are Off ered wi th first rate r e c om

m e n d a t ion s, it is probable that about on e

third are actually good ,

on e -
third have
some value and ,
on e -
th ird are practically
worthless . Hence the very natural infer
ence that whatever art there may be in the
matter of investing is to be exercised chiefly
in the avoidance of unworthy off erings and ,

it i s to that po i nt that a profitable dis

c u s sion of the subj ect must be mainl y
directed .

For the conditions of things described ,

the laws of some of ou r States in gi ving

corporations almos t lim itless power to issue
negotiable paper as well as in permitting all
,

sorts of compani es to incorporat e them

 WI SE INVESTING 31

s elves ,
are ,
undoubtedl y ,
very largely t o
blame . Our banks are closely watched and
very properly restra in ed from t ak ing
people s money $
on false pretenses ; but how
much better is i t f or i ndustri al and other
corporations to take it b y means of legali z e d
fictitious evidences of value B a nk s are b y
no means the only corporate in sti tutions
that need watchi ng . One of the re f orms
that would seem to be very much demanded
is legislation prohibitory of the creation by
companies existin g by authority of law ,
of

stocks and securities not representing cash

a ctually paid i nto their treasuries ,
or pro
p r ie t a r
y interests whose valu es are to be
d etermi ned by di s interested parties . Penn
s ylvani a has in corporated substantially such
a provis i on in her cons titut i on . Her e x
32 THE ART OF

ample should be followed by all othe r

commonwealths .

But the security behind or beneath the

debenture or other paper obligatory is not
the only thi ng to be looked i nto by the in

ve st or . Even the form of the document

may be important . A case in point inas ,

much as it shows how the preparation of an

undertaking f or the payment of money may
change its apparent value would seem in ,

this connection to be appropriately quoted .

Some years ago certain townships in the

State o f Missouri were desirous of aiding the
construction of railroads with their credit .

The State L egislature , to that end passed,

an ac t authorizing the issue and sale of

bonds Obligatory upon them ; but it was

— —
stipulated a ver s ingular provi s i on that
y
,
 WISE INVESTING 33

instead of being put ou t b y the townshi ps ,

the bonds should be execute d by the offi

c ia l s of the counties in which they were lo

c at e d . Accordi ngly debentures aggregating ,

s everal mil lion dollars were thus prepared

and di sposed of . The bonds bore the seals
of the counties and the signatures of the i r
o fficials On the back and at the to p
. of each
s ignature in large letters were t he words
$
$
county bond . The instrument began wi th
the recital in the usual form that it was
, ,

i ssued by the county but farther ,

on , and
in the s m allest type employed came the ,

s tatement that i t was executed f or and in

behalf of a certain townshi p wh i ch , a lone
was to be responsible f or i ts payment .

These bonds were extens i vely advertised as

$ $
county bonds , and probably in mos t in
34 THE ART OF

stances certainl y i n many were sold as

, ,

such and i t was not until purchasers parted

,

with their money that they discovered that

, ,

instead of getting the papers of well known

and wealthy counties they had secured only
,

the obligation of townships they had never

heard of before . It was then manifest
enough that they had been made the v i ctims
of a piece of very sharp a nd very shabby
p ract i ce . In v ery many cases the buyers of
bonds and other securities learn when it is ,

t oo late ,
that the i r purchases ,
o wing to

some obscure and apparently innocent pass

age that had been overlooked or dis
regarded are very diff erent from what they
,

thought they were getting . How often

have careless i nvestors that supposed that
they were p urchasing undertak ings tha t
36 THE ART OF

from t he on e intended to be p aid f or . The

fact is th at c omparatively few u n p r of e s

sion al bond and stock purchasers ever care

fully examine the i nstruments they acqui re .

They look at the headings those parts that

,

are in big letters and take the rest

,
f or

granted . It i s a most unwise practi ce .

U nless you are previously familiar wi th

the document in all its parts don t fail ,

$
to

read it before you buy . Read it all the ,

li ttle type as well as the big type the ,

in

d or s e m e n t s,
$
the coupons and all ,
. $ on t
$
take somebody s else word for it . Examine
the seal the signatures and even the em
, ,

b e llish m e n t s . Something may be disclosed

that will change your mi nd and save your
mone y .

But i f th ere are tricks i n the mak ing of

 WISE INVE STING 37

s ecurities even more are

,
to be apprehen d ed
in the selli ng of them , and should be
g uarded against wi th corresponding dili
g ence . It i s a notable f act that no poor
securities are ever o ffered . They are al

ways good so long as they are on the mar

ket It i s o nl y after they have been pur
.

c hased that they prove to be worthless .

Interest has never kno wn to fail on bonds

that are seeking investors although de f aul t
,

h as sometim es followed very closely on the

s ale of the last obligations . Indeed i t is
,
no

s ecret that interest is often paid ou t of the

proceeds of the bonds particularly railroad
,

issues the purchasers in thi s way gett ing a

,

portion of their ow n money b a ck wh ile the

p rocess of marketing them is going for
w ar d , although su c h a thing has seldom
38 THE ART OF

been known to happen when the entir e

issue was disposed of . The advertisement s
of the bond sellers are sometimes marvelous
-

productions . No such securities as the y

have to o ff er have ever been on the marke t
be f ore . They are absolutely safe ; they p y
a

extra rates of interest etc,

.
,
etc
. The won
der is that with so much capital seeking in

vestment it is foun d necessary to advertis e

,

such perfections at all . In such cases it is

hardly necessary to sa y that the only saf e

rule f or investors i s to find other uses f or

their money however strong the temp t atio n

,

may be .

A common e xpedient of bond makers and

-
$

bond merchants i s
-
to fortify their issue s
with the favorable op inions of eminent
lawyers . Thi s i s particularly the case whe n
 WISE INVESTING 39

the O bligations of municipalities or of com

p a n ie s that are dependent upon contracts
with municipalities are o ff ered municipal ,

ities having shown an unpleasant di s

p osition to go back on their undertakings .

No exceptions can be taken to the pract i ce

re f erred t o, as counsel learned in the law
should in such cases always be consulted ;
but the writ er has to say that he has never
$
yet known a securi ty so poor that a lawyer s
O pinion could not be had to back i t . Such
testimonials should be taken for wha t the y
are worth and no more
,
.

When so many seductive baits are offered ;

so many nets and traps , c ontrived and con
structed by clever bra i ns and cunni ng
fingers are spread f or the capture of those
having m oney is it surpris ing that the care
,
40 THE ART OF

less and credulous are victimi zed and eve n ,

that the sagacious and prudent should s ome

t ime b e taken in $ Nevertheless for the ,

losses they have sustained investors as a ,

r ule have themselves chiefly

, to blame . The
mi stakes made in nine cases out of ten
, ,

have been the purchase of cheap securities .

The hope of realizing a little more than or

d in a ry interest by buying paper at a

, di s

c ount has proved to be the rock

,
on which
u nnumbered cap italists have spli t . In ad

$
d ition to their money s worth they have ,

e ndeavored to get some th ing f or not hi ng ,

with the result most generally of ge t ting

n oth ing for something . It is remarkable
h ow blind are people ordinarily sagac i ous
,

e nough t o make money to the eff ect th at ,

p roperty can n ot pay a revenue beyond it s

 WISE INVE STING 41

producing capacity . For instance how can

,

a trolley company whose line is wholly

,
or

mainly built f rom the proceeds of mortgag e

bonds sell them at a heavy discount
, ,
be

sides allowing large c ommissions for the sell

ing and then pay both this in terest and
,

di vidends on stocks $ Or h ow can a poo r

agriculturi st ,
oc c upying a hal f i mproved -

farm ou t on the frontier w i th a family

,
to

support and grain selling barely above th e

cost of p roduction pay ten,

or twelve p e r

cent upon the capita l wi th wh i ch he doe s

.

business $
By what rule or r u les is t he in v estor to

govern himself . No formula can guarante e

h im absolute saf e ty . One thing however
, ,

he can properly count u p on vi z ,

.
,
that he

must expect to pay a fa i r price for a good

42 THE ART OF

s ecurity— on e that wi ll return him no more

than a moderate interes t on his money and ,

if he wants to speculate and willing to take

risks that is another thing
,
. He can then
look for bargains . As a general proposition
it can be asserted that the day for high
prices for money ,
as the d ay for large
profits in trade or manufactur ing ,
or indeed ,

in any regularly recognized business with

us has gone b y
,
. The capitalist who sends
his money into a new section or puts it into ,

a new mechanical process or a new con

structive enterprise may ,
or may not make
a hit but for the ordinary and conservative
,

operator the conditions

,
of the comm ercial
and fin ancial world gives warning that only
small profits are to be looked f or . The first
and main thi ng to be studied is safety . And
44 THE ART OF

As heretofore stated with the creation

,
of

new enterprises and properties ,

and the
development of ol d ones new securities are
,

constantly appearing in this country and a

fair share of them ought to be good . In

deed ,
ou r securities ought to be the best in
the world . The sure and rapid growth o f
ou r resources supplies a reliable support
as long as fair intelligence and common
honesty attend their production . The only
thing is t o choose with discret i on ,
so many
doubtf ul and even fraudulent issues ap

p earing at the same tim e ; but no more

judgment is really demanded than in pur
chasing lands or cattle .

Two common and often fatal mi s ta ke s

should be avo i ded . One is in relying solel y
upon the adv is e of another . No on e com
 WISE INVE STING 45

petent t o form an o pini on f or hims e lf should

put his pecuniary i nterests unreserve dl y in

the keeping of another . Such absolu t e c on

fide n c e invites betrayal . By far the great e r

number of losses to investors has been in

securities purchased exclus i vely on the

recommendation of interested outside
parti es . While i t is well to get the op ini on
of a reputable broker the p ur chaser should
,

i nvestigate and dec i de f or hi mself . The

other mi stake is to uni formly gi ve prefer
ence to li sted securities . As po inted ou t at
the beginning of thi s article many persons ,

seem to th ink that stocks and bonds must

have a value if they are quoted at some
stock exchange forgetting how many fan
,

cies have been ballooned until they have

burst at such places . On the contrary such
 THE ART OF

a position i s l ikely to exp ose them to mani

p u l a t ion f or purely speculati ve pur p oses .

Stock e x change quotations are often unsafe

-

guides to buyers . T hey represent n ot

merely the value of the property but also

t he pitch of speculation at the time . When
securities are converted into foot balls -
f or

gamblers to play wi th they are pretty cer

,

tain to be t oo high or t oo low The main

adv a ntage they can have i s a readier mar
ke t ab il ity i n case of an urgent nee d to sell ;
but it is at the times when such need is
likely to e xi st that they are pretty certain
to be at the lower point . NO spec ul ative
help can long take the place of real value .

Securities in the long run must stand

, , up

on their merits and purchasers ha v e merely

,
 WISE INVESTING 47

to follow busines s pr in c iples as taught by

the canons of common sense .

In seeking i nvestments ,
and e s p ecially
long time i nvestments ,
there are se v eral
t hi ngs to be t a ke n i nt o account . Th e re i s
not o nl y the ques t ion of the k in d of secu
r ity to p urchase but t he quest i on
, of the
time of purchase . There are opportunities
to be looked f or as well as p itfalls to be
shunned . It i s duri ng p eriods and seasons
of depression when secur ities are forced
,

upon the market often ,

to be sacrificed
a nd they are certain to come if waited f or
—
long enough that the shrewd in vestor
finds his richest harvest . T hat, however ,

c an not be said of the or di nary i nvestor .

He usually buys when securities are up and

c onfidence is unimpaired ,
and becoming
48 THE ART OF

frightened as the market values go down ,

sells when they are a t the bottom and hold s ,

his money to reinvest in something else no

better and probably not as good when the
, ,

t ide has turned . As a ru le the best t i me

,

to invest is when others are unl oa ding . In

mone y m atters it is never sa f e to follow
$
the crowd .
$
Nor i s i t safe , ( which i s lit
tle more than the expression of the sam e
idea in another form) to p urchase a se cu r
,

$
ity when i t i s on the b oom $
A p eculiar .

ity of ou r money market conservative

,
as

it is popularly supposed to be is that it ,

is

constantly changing its f avorites . Its of

f e rin gs come in waves . Its dealings at on e

time may be chiefly in railways at anothe r ,

in municipal obligations and at another ,

th e

excitement may run to m ining shares or

 WISE INVESTING 49

mort gages on ranches and real estate . For

the tim e all professional brokers and bond

and share sellers urge their customers to

a dopt the po p ul ar i ssue ,

of which as the ,

result of the increased demand there is ,

almost certain to be excessive if not frau ,

du l e n t production To yield to the pres

sure of such a time is always risky . Old
and tried securi ties li ke , ol d fri ends are ,

li kely to be the tru est an d best .

One thing the investor would do well

never to forget viz ,
.
,
that there are always
plenty of good securities in the market .

No on e with money need ever fear that

others will get all the solid i nvestments ,

and in the apprehension that there wil l

,

not be enough of that sort to go around ,

put up with an inferi or arti cle . $ on t let

$
50 THE ART OF

him choose what is not altogether sa t isf ac

tory under the impression that nothing

,

else as good or better will o ffer . If he

does so sooner,
or later he wi ll regret i t .

Something good always comes to him who

waits with money in his hand .

Another thing of a precautionary nature

it is well enough f or the investor to do and ,

that is to scatter his purchases . The ol d

adage about p utting all the eggs in one

basket appli es with peculiar f orce to in

vestments . The tendency with those hav

ing but moderate sums to invest ,
and
who need to be the most circumspect ,

is to make u p their m inds in favor of a

single l ine of securit i es and put eve ryt hing
there . Of course a fail ure i n tha t quarter
,

is p ar ticularly disas tr ous . T he writer

 *
II .

$
New York has no more entertaining
public exhibition than its Stock E x change .

It is on e of the show p laces of the c i ty . The

visitor who for the first t me looks down
f rom a gallery upon its m e mbers i n the act
of transacting business is astonished at the
,

a pparent confusion he wi tnesses . He seems

to have entered a madhouse . The i dea that
th e market values of ou r leading secur ities
should be determined by what appears to
h im to be a howling m ob of inc u rable luna
tics is incomp rehensible
,
. But if nothing

*
A revision of the original arti cle by $ ohn
F . Hume .
54 THE ART OF

could be said against the Exchange which ,

is simply a big bazaar for the sale of bond s

and stocks except its tumultuousness and
,

the seeming lack of digni ty among it s

operators crit i cism would have

,
in it bu t an

i ndiff erent target for i ts shafts . Much

graver questions grow ou t of i ts existence .

Is it a harml ess institution $ Is it a p u b lic

blessing $ Is it a public curse $

As a great central mart for curren t .

securities ,
it i s c ertainly of vast use .

There is no reason why bonds and shares

should not be publicly deal t in and in larg e ,

quantities as well as drygoods ; as well as

,
.

corn and cotton and beef and kitchen v e ge

t ables . If the Stock Ex change tran sactions .

were restr i c t ed to the bona -

fid e buying an d

selling of bonds and shares not a , w or di

 WISE INVESTING 55

could be justly said against it . But is i t so

restricted $ U nfortunatel y, no . A main

occupation is wageri ng on stocks ; m any

traders while going through the form of

,

buying and selling simply bet their money

,

upon the rise or f all of the shares they

select as they wo ul d upon the shiftings
,
of

cards or di ce . The Exchange while do ing ,

a large legi timate bus in ess ,

is also an
immense speculating establishment .

Its members are di vided into t w o classes

those wh o execute commissions f or others ,

and thos e who deal on their own account .

It i s nee dl ess to say that among the latter

are the boldes t and sharpest speculators of

the day . The care ers of these men can be

sketched in very few words . Through the
exercise of sup erior native wi ts or the a c c i
56 THE ART OF

dent of e x traordin ary luck they flou ri sh ,

marvelously for a time ; but o nl y as a rule , ,

to lose their heads and their balance at the

last and go down often through a single
,

di sastrous —
transaction faster than they
went up . There are exceptions . Some
flourish to the end dyi ng generally young
,

or retiring with estates unbroken But

they are exceptions . Wall Street i s a place
where f ew fortunes are made and a great
many are lost . The stori es of i ts m agnifi
cent triumphs and ,
of its equally m a gnifi

cent wrecks read li ke tales from $

The
Arabian Nights $
; some of them l ike pass
$ $
ages from $ ante s I nf erno
$
. Wall Street
has had i ts suicides by the dozen and wi ll ,

have plenty more . It would not be Wall

Street wi thout surpri ses . And yet there i s
 WISE INVESTING 57

$
a s ingul ar sameness in the ordinary trader s

experience . He runs an exciting if at times ,

a rough and stormy career snatches , ,

or

seems to snatch a good many pleasures by

the way makes and breaks with about equal
,

abandon wrecks his health in a hurry dies

, ,

—
early and suddenl y and then well then , , ,

when his aff ai rs come to be settled there ,

are o f ten found large b locks of utterly

worthless shares perhaps a fas t horse
, or

t wo, possibly a yacht or automob ile some ,

costly souvenirs a few solid assets possibly

, ,

heavy debts ,
or even actual bankruptcy .

Poor f ellow everybody has forgotten all

,

about h im $

O f the ordinary Wall Street speculator ,

however clever or however f avored f or a

time it is per f ectly sa f e to say that if he
, ,
58 THE ART OF

li v es long enough and sticks to the bus i

.

ness he will finally come to gri ef

, .

Bu t how about Vanderb ilt pere ,

wh o was
more or less of a Wall Stre e t operator all
h i s many d ays and a few others not wholly
,

d i ssimil ar if less cons p icuous e x amples $

Ah $ that brings us to a view of some of

the interior workings of the New York

Stock Exchange that the public has little
conception of , and which alone will give a
correct understanding of its real character .

The pop ular idea is that the Exchange has

up on its list to be dealt in all
, , ,
or nearly
all prominent stocks and bonds of
,
a c kn owl

edged value impartially selected and solely

,

because of their meri ts . There could be no

greater misconception . We look there i n
vain for the shares of hundreds of h igh
60 THE ART OF

Simply that the much genuine rubb i sh has

been unloaded upon the public .

Much but not too much has been said i n

, ,

cond e mnation of stock water ing ; of the

product i on of corporate securi ties r epr e

senting little or no cash investment and ,

which innocent p ersons are led to purchase

in the belief that they are getting full
values . But h ow is i t that these speculative
issues are so eas ily marketed and the pro ,

du c e r s escap e all responsibility f or the im

positions practiced $ Here is where the

i

$ $
Exchange s $
credit ,
so to speak is often
,

used . The Exchange is made the conduit

through which the water is diverted to the
$
investor s pockets . When it takes the stock
upon its list the Exchange becomes
, p r a cti

cally the seller supplying the machinery

,
 NWER S I

WISE INVESTING

an d means of trans f er and i t guarant e es

,

nothing . Whoever buys at its board i s

understood to take all risks no matter how ,

much deception is used . He may be vic

t imi z e d, but he has no redress . The Ex
change is simply the medium through
which the over issues have been marketed
-
.

It is true of cour se that without the fac il

, ,

i ties of the Exchange many ,

of the stock
watering frauds whi ch have bec ome b i stori

cal never co ul d have been successful ly c on

summated .

$
Once on the Exchange s l i st seldom is a ,

stock so worthl ess that with a shrewd ma ,

n ip ul a t or behind it it cannot be at som e

,

time u nl oaded . The process has been a

S imple .
on e $ First they are $
washed $

singular how the idea of water runs

62 THE ART OF

through all stock —

operations or pre
arr anged sales o f the stock . Outsiders are
then told that there is money in it and th ey ,

begin to buy . The stock is duly $

sup
ported ,
$
—
an i ndispensable precaution that
i s, it is taken at quotation prices when
O ff ered by outside owners and so up and up ,

it is marked the Speculative public taking

,

l a rge blocks in the belief that it is going

higher and with little thought
,
of its actual
value until there comes a t ime when the
,

original supply has been exhausted and the ,

shares ar e no longer supported and down , ,

down they go . The real value o f the stock

has little to do with its negotiations . In
the light of this explanation there is no ,

di fficulty in comprehending how certain

great financial magnates who are leading ,
 WISE INVE STING 63

o perators in Wall Street have amassed such ,

c olossal fortunes . They have been stock

manufacturers as we l l as stock dealers . The
New York Exchange has been their field of

o perations their market place

,
-
. Through i t
they have sold their wares . Had they l ike
,

ordinary speculators confined themselves to

,

$
other people s goods ,
it i s questionable
whether they would have grown exception
a lly rich . They might have become poor ,

as the most of their associates have done .

But when with consciences conformable to

their opportunities they had the means of
,

s elling water at hi gh figures and i n p r a c t i

c ally un l imi ted quanti t ies it i s no wonde r

,

that their fo rtunes swelled t o fabulous pro

p ortions .
64 THE ART OF

There are so few legitimate lawful and , ,

legally controlled exchanges whereon spec

u l a t ion to any large extent is conducted ,

that Only the leading ones need be named .

The New York Stock Exchange is a lawfully

constituted association with absolute p owe r
to make and en f orce its own rules and
regulations upon its members . An applica
tion f or membership in it is scrutinized with
the greatest care and the applicant must
,

prove himself to be a straight f orward hon ,

est man before he i s accepted . Tr a n sac

tions between members are in most instance s

verbal ,
and as they amount to million s
Of dollars i n value daily confidence in each
,

other is imperative . It is a rare occurrenc e

that a dispute arises because o f the accu
,

racy and care exercised in their transaction s

 WISE INVESTING 65

with each other and as a rule the same

, , ,

honesty and methods are extended to their

relations with customers wh o are not mem
bers . The legitimate broker is always so

l ic it ou s for the welfare of hi s client from

,

selfish motives if nothing else

,
. A cus
tomer who imagines he has not been fairly
and honestly dea l t with has onl y to make
complaint to the secretary of the E xc hange ,

stating his grievance and an imme di ate

,
in

ve s t iga t ion is had f ollowed by redress and

,

the severe discipli ne of the O ff ending mem

ber should wrong doing be discovered
,
-
. So
high is the character of Exchange members
that no hes itation i s felt by the public i n
entrusting to th e i r custody large sums of

mone y . What i s true of the New York

Stock Exchange i s also t rue of the Chi ca g o
66 THE ART OF

Board of Trade, upon which is handled th e

vast products of the great agricultural

West . The p ublic should be warne d
against s p eculative tra n sactions wi th any
but membe r s of r egular e x changes or bro
kers having p ermanent connections with
th e m . The novice is oftentimes unabl e
to discriminate between the legitimate and
fraudulent but there is an infallible test
, ,

as f ollows $ The rules of the New York

Stock Exchange and Board of Trade p ro

vide that customers shall receive a memo

r a n du m of each transaction made which ,

shall show the date upon which it was made ,

the pri ce and ,

wi th wh om , so that i f a cl i ent
has any doubt about it he can inqu i re ,
of

the p arty n amed on t he m emorandum

whether it is true or n ot , or he can ask th e
68
1
THE ART OF

$
the manager , who gives all orders f or

p urchase and sale . The business is ge n

e ral l y given to a number of commi ssi on

houses who transact a miscellaneous busi
ness in order to kee p the transaction under
,

cover as much as possible because publicity ,

would probably defeat the plan . The

stocks subj ect to the manipulation are made
—
to look weak and strong alternately weak
$ $
i n order to induce short selling when the ,

$
pool is a free buyer and strong to induce
$
,

$ $ $ $
outside buying when the pool i s a seller .

—
That sort of see saw manipulation i s c on

t in u e d, making the stocks active and at

tractive to the public unt il many thousand

,

shares have been ac cumulated In the mean .

time the most favorable rumors and re p ort s

relating to the v alue of sa i d stocks are care
 WISE INVE STING 69

fully pu t forth through market letters ,

newspapers ,
an d other well known mediums
-
.

This is done for the purpose of induc in g the

publi c to buy ,
on the p erfectly correct
theory that the public does buy when it is
asked to provi di ng the price is
,
h igh and
a d v a nc ing, and especially if it i s informed
that $
strong parties are behi nd the deal $
;
$ $
when the public comes in good and
s trong influenced by predictions of a fur
,

ther gr eat advance it gets the stock ,

. The
$
strong $
parties have $
unl oaded —the $

$
p ublic is holding the bag ,
$
and wonder
what is the m atter .

Recently a new form of advertising for

L ambs
$
has become popular which ,
re

q uires no capital beyond the sum needed f or

n ewspaper b ill s . The advertisement usual

70 THE ART OF

l y states $ $
that for a small sum paid weekly ,

$
or monthly ,
the subscr iber w ill rece iv e
$ $
sure t ips on the market s movements and ,

that in consideratio n of on e -
quarter or on e

half of the profits secured the self style d ,

-

$
$
Advisory Bro kers will ha ndle the deals $ $

f or
$ $
the L ambs wh o don t kn ow how to d o
$

it for themselves . These brokers have

$ $
a

$ $
sure th ing , as t hey always adv i se on e p er »

son to operate for the decline and anothe r

f or an advance . They are certain to mak e
money i n on e of the transactions . It is

marvellous what a number of otherwi s e

cautious ,
careful people are v i ct imize d
yearl y in these shady operations .

But the Exchange is nevertheless v ery

useful and necessary in supplying quotabl e
values and furni shing a ready market f or
 WISE INVE STING 71

all classes of securit i es . T hi s im porta n t

fun cti on of the Exchan ge i s w e ll brough t

'
ou t in a paragra p h ta ken from Chas A . .

$
;
Conant s recently p ubli shed book ,
$
Wall
an d
$
S t reet the Count ry . Says Mr Conant $
.

One of the most p ers i stent of the hallu

$

c in a t ion s whi ch p reva il among people other

wise apparently lucid and well informed i s ,

the concepti on t hat operati ons on sto ck an d

produce exchanges are pure gamblin g . A

moment s reflection it would seem might
$
, ,

conv i nce such person s that a function whi ch

occupies so important a place in the mech
a nism of modern bus iness must be a useful
and necessary part of that mechani sm ; but
reflection seems to h ave little pa rt in the
intellectual equ ipment of the assa ilants of

organized markets . Only recently I picked

72 THE ART OF

up a book pur p ort ing to treat of the s ub

j c et of ethics and found thi s remarkable

,

passage
If instead of betting something so
$
,
on

small as falling di ce , on e bets on the rise

and fall of stocks or on the price which
wheat w ill reach some months hence and ,

if by such betting on e corners the c om mu

n it y in an article essential to its welfare ,

throwing a continent into conf usion the ,

law will pay not the slightest attention . A

gambling house for these larger purposes
may be built conspicuously in any city the $

$
sign Stock Exchange be set over its door
$
,

influential men a p p ointed its Officers and ,

th e law will protect i t and them as it does

the churches . How inf amous to forb i d
gambling on a small scale and almost t o ,
 WISE INVESTING

encourage it on a large $ $

$
The writer who undertook to discuss the
stock exchange in that manner in a book on
ethics mi ght well have d e voted himself less
,

earnestly to the sm aller refinements of

ethical definition and reverted to the an

cient maxim ,
$
Thou shalt not bear false
$
witness against thy neighbor . What he
says is a hodgepodge of misconceptions . If
it be true that betting on the rise and fall
of stocks be gambli ng as it undoubte dl y is
, ,

then what fo l lows has no relation to the

first suggestion . To on e having any knowl
edge of the subject matter the two parts
-
, of

the first sen t ence are inconsisten t wi th each

other and mu t ually destructive . Pure bet
ting is done in bucket shops is -
, of no use to

the community is destructive to the moral s

,
 THE ART OF

and p ockets of young men and cannot be ,

too severely censured . But such betting is

not carried on in buil di ngs bearing the Sign
t o do
$ $
Stock Exchange . It has nothing
with the legitimate p rocesses of the ex
changes . Moreover ,
on e cannot corner the
co m munity on any arti cle essential $
to its
welfare by betting in bucket shops
$
-
. He
may perhaps do it within certain limits by
a ctual transactions on the produce ex
changes because they involve the right to
,

demand delivery . I f it were true however , ,

that no such deliveries were contemplated

or could be m ade , as is usually the case in
bucket shop gambling it would no more be
-
,

possible to corne r the supply of wheat by

betting on i ts future pr i ce than i t i s possible
f or a pol iti c i an to carry the elect i on his
76 THE ART OF

trans f errable shares . The creation of

share companies enables the small capital
of individuals to be gathered into large
funds necessary to build factories and rail
ways . It divides the risk of an u n der t ak

ing among m any p ersons and places the

,

enterprise beyond the accidents of a Single

human existence by giving it a fic t ic iou s

bo dy dowered by l aw with perpetual life .

$

But i n additi on to being a balance wheel -

to the business of the country Stock Ex ,

change speculation is o f ten a di sturbing

f actor . It does not even f urnish trust

worthy news . Nowhere is it so difficult to
get reliable intelligence concerni ng a ny

stock dealt in there ,

as in Wall Stre et .

The inventiveness of the speculative broker

is something marvelous . He can ruin the
 WISE INVESTING 77

country on e hour and save it the next . He

can blight the crops o f a whole section ,
or

he can fil l the land with abundance . He

can make war or he can make peace e x actly ,

as hi s monetary interest demands . Rumor

mongering seems to be a part of his trade .

He is the c hi ef of liars . Perhaps he is the

exception rather than the rul e among hi s
— —
fellows it is to be hoped that he is but
he is a pretty numerous exception for all ,

that $ What is the consequence $ Simply

that when a financial storm threatens the
country the Exchange is almost certain
,
to

be the center of disturbance . No other

institution is so sensitive . It exaggerates
all the symptoms of trouble . It sends ou t

its alarm ing reports as the storm cloud -

sends ou t its lightnings . L ooking at it as

78 THE ART OF

the barometer of values the timi d naturall y

,

conclude that everything is lost and thus ,

the ev il is unduly magnified . Wall Stree t

i s as much the natural field for pani cs as
the prairie i s f or tornadoes .

While the Exchange has been of ad

vantage to the business interests of the

country ,
there are many who have had
d ealings with it who would not test ify in
its f avor . O f the thousands and thousands
who have visited it in person or by proxy ,

and done a little business with it not many ,

are ready to rise up and call it blessed ex ,

cept in a qualified sense . I f all were to

give their experiences what woul d the ver
,

dict be $ It is to be apprehended that the

evidence o f a very decided maj ority would
$
not be flattering to Wall Street s specula
 WI SE INVE STING 79

tive methods ; that their testimony would

be that they had found it easier to lose
money than to make it .

$
The man wh o says he never speculates
in stocks but buys only what he can pay
,

f or,
$
is a su ff erer as frequently as the man
$ $
who buys on a margin . He is generally
a
$
sticker —on e who never
$
lets go $
.
$
He
buys a security that he beli eves in ,
an d so
s trong is his confidence that he will not
accept a generous profit if it is O ff ered him ,

and he is still more tenacious when a loss

is growing . His temperament will not ad

mi t of the possibility of an eventual loss ,

but the rule with e x ceptions i s that he will

finally take his loss when it has reached its

greatest proportions . Securities amount

ing to hundreds of m illions Of dollars h a ve
80 THE ART OF

bee n carried by people who never Sp e c u

late ,
$
through the depression of the p a st
four years . They have paid interest on
money borrowed p aid assessments un d r
,
e

re -
organization schemes ,
and still a los s
stares them i n the face .
 II I .

The growth of corporate i ndustry i n this

country during the past six years is in m any
respects the most remarkable phenomenon
of modern times . In every conceivable line
of —
human activity commercial financ ial , ,

manufacturin g transportation public ser

, ,

—
vice great and extensive develop ment
has taken place .

And consistently enough this develop

, ,

ment has proceeded alo n g certain defi nite

lines . The peri od fro m 1897 to date migh t
be looked upon as the transiti on period of
— $
the world s and particularly Ameri ca s $

81
82 THE ART OF

industrial forces . It has been a time of

business change c h ie fly— not m e r el v a

growth in aggregate volume or out put
but a change in method and in s cope . In
other words it has been the period
,
of evo
l u t ion from small to large methods ; from
limi ted to unlimited capacity ; from com
p e t it ive —
to c o O perative means of production
and distribution .

With this evolution of the industrial or

ga n is m ,
numerous changes have taken plac e
in the i deas wishes and am bitions
,
of busi
ness and professional men and in fact , , ,
of

workers of every kind ; many customs and

habits in commercial and industrial field s
have grown obsolete and have been super
s e de d by others ; new industries have been
created and avenues opened for the produc
84 THE ART OF

is ther efor most deeply involved i n th e

s uccess or failure of the enterprise . His

c lass ,
too ,
is on e which has naturally
evolved from a small portion of the com
munity to a very large on e , as since all
,

undertakings of importance are now con

ducted on the corporate plan he has ,
n ece s

s a r il y become a stock or bond holder where -

,

formerly he was a partner ,

or , as in many
cases sole owner
,
.

Now this growth of the investor class

, ,

$
and of the investor s field has made it n ece s

sary that the details of all large businesses

be given greater publicity than ever before ;
that the fullest knowledge possible be given
the public regarding the ability and per
s onn e l O f the corporation s management ;
$

its methods ; its situation ; its advantages ;

 WI SE INVESTING 85

its political relations ; its financial and com

m e r c ial status income etc
, ,
. And here is
an instance of where the new industrial re

g ime has created a new industry — that of

the financial or corporation statistic i an .

It has made this new vocation necessary

and i mportant just as it has brought into
,

—
being other busin ess speciali sts the under
writers the men ,
of a fl a ir s, and the so
-
called
$ $
generals of industry . Without the men
of aff airs and industrial experts generally ,

no large modern enterpr i se could be suc

c e ssf u l ; and it is equally true that withou t
s ome economical m ethod of furnishing to
the public accurate details and statistics of
the many thousand public corporations the ,

investor ba nk er or broker would forever be

,

a t sea .
 THE ART OF

Following these logical lines a natural ,

and practical development O f the past f ew

years has been the Bureau of Corporation

Statistics located at
,
35 Nassau Street New ,

York City . This Bureau furnishes ge n e r a l

and special inf ormation regarding the en

tire corporation field and covers all li nes

,
of

—
i ndustry Steam and Electric Railroad ,

Industrial ,
Gas ,
Electric L ight , M ining ,

Telephone and Telegraph ,

Banks ,
Trus t
—
Companies in fact, all corporate under
takings and enterprises .

A brief history o f this Bureau w hi ch ,

h as

within a remarkably S hort period become

on e of the important adjuncts of the fin an

c ia l and investing world may not be amiss ,

.

Early in 18 9 9, Mr . $ ohn Moody who ,

h ad

been f or a number of years operating a

 WISE INVESTING 87

statistical bureau f or the well known bank

-

ing house of Spencer Trask Co , . conceived

the idea of putting in operation a bureau
of financial statistics whi ch could be made
accessible not merely to a private banking
house and its clients but ,
to the general
investing p ublic also . Well knowing the
difficulty through an extended experience
, ,

of securing accurate and reliable informa

tion on investment securities in general , be

felt confident that the field would pro v e a

large and growi ng on e .

And he was not mistaken . In 1 9 00,

j ointly with several associates he formed a ,

c ompany with liberal capital and a d va n

t a ge ou s connections to develop a Bureau

,
of

Corporation Statistics along the lines here

i ndicated .
88 THE ART OF

The Bureau of Corporat i on Stati stics has

grown wi th remarkable rapidity both as ,

regards its accumulation of information and

its general patronage . It now embraces a
financial library of thousands of volumes ,

and current data (increasing daily and sys

t e m a t ic al l y revised) regarding Amer i can

and f oreign corporations and i nvestments

of every kind and nature .

Each annual subscriber is entitled to the

full use of the financial statistical files and ,

to make special inquires whenever he may

desire to do so either by personal call mail
, ,

or telephone . Reports ar e furnished to

annual subscribers and by the single report ,

regarding all corporations and investment

securities . The charges are moderate in
all cases . The reports furnished are no t
 WISE INVE STING 89

influenced or
$
inspired and have no bear
$ $
ing on Wall Street $
tips or gossip . In
brie f i t is a bureau o f legitimate inf orma
,

tion for investors ,

bankers ,
corporation
lawyers etc ,
. In some respects it can b e
likened to the mercantile agency the vital ,

distinction being however that it does not

, ,

supply credit ratings but furnishes fact s ,

and figures regarding corporate enterprises

of every nature from the investor s stand $

point purely . The o ffice of the Bureau of

Corporation Statistics is at 35 Nassau

street , New York ,
where the manager ,

Charles F Bridge is always glad to receive

.
,

visitors , and show th e m the Burea u in

operation .
92 THE ART OF

which contains statements regarding more

than eleven thousand corporations giving ,

statistics as to the property the capitali ,

z a t ion , the bonded debt the dividends the

, ,

financial condition and earni ngs the offices , ,

plants etc,
.
,
of each corporation . $ etailed
and accurate inf ormation ,
indicating the
degree o f their strength and reliability is ,

imparted concerning steam railroad ,

gas
and electric light electric traction water
, , ,

telegraph telepho n e and cable industrial

, , ,

commercial ,
mining ,
and oil companies ,

banks and trust companies in the U nited

States and Canada all this being ,

of utmost
value of those concerned . Each year shows
a marked advance on even the excellent
previous editions ,
covering new matters
not touched upon in previous is sues . The
 WISE INVESTING 93

contents are divided i nto eight sections

and a complete general alphabetical index
and a special inde x ,
arranged by C ities ,

render the volume a perfect financial refer

ence publication . N 0 other work of the
kind covers so much ground or can be so
useful to those who need to consult such a
manual . The book is attracti vely p rinted
and bound . Price in cloth $ 1 0; in full
,

flexible leather $ 1 2
, .
 $
A man s learning dies with him ; even
his virtues fade ou t of remembrance bu t
,

the dividends on the stocks he bequeaths

to his children live and keep his memory
green.
—Hol mes
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