EDITED BY ALBERT SHAW CONTENTS FOR AUGUST, 1912 Sir Lawrence Alma-Tadema..... Frontispiece Cartoons of the Campaign.......... 169 Woodrow Wilson-A Character Sketch 177 By HENRY JONES FORD A Glance at Party History. The Southern Delegations.. Efforts to Reform the System. 134 135 Bargaining With the Bosses. 136 "Fixing" the Temporary Roll. 136 134 Thomas R. Marshall, of Indiana.... By THOMAS R. SHIPP 185 The Nominating Conventions of 1912.. 191 140 A New Party: Do the People Want It?.. 197 By ALBERT BUSHNELL HART With cartoons 144 The Growing American Bureaucracy... 201 By JONATHAN BOURNE, JR. The Borrower and the "Money Trust" 207 TERMS:-Issued monthly, 25 cents a number, $3.00 a year in advance in the United States, Porto Rico, Hawaii, Cuba, Canada, Mexico and Philippines. Elsewhere, $1.00. Entered as Second Class matter at the Post Office Department, Ottawa, Canada. Subscribers may remit to us by post-office or express money orders, or by bank checks, drafts, or registered letters. Money in letters is at sender's risk. Renew as early as possible in order to avoid a break in the receipt of the numbers. Bookdealers, Postmasters, and Newsdealers receive subscriptions. (Subscriptions to the English REVIEW OF REVIEWS, which is edited and published in London, may be sent to this office, and orders for single copies can also be filled, at the price of $2.50 for the yearly subscription, including postage, or 25 cents for single copies.) THE REVIEW OF REVIEWS CO., 30 Irving Place, New York City earnings are available, it seems that interest charges were covered only by a very small margin. The regularly published statements do not make clear just what policy is being followed in the matter of maintenance, depreciation, and so forth, but the road's management seems to be looked upon as one that would follow recognized standards in this respect under ordinary circumstances. The fact that the line is comparatively new would, of course, mean that it would not be necessary to provide for such charges quite so liberally as would be necessary in the case of an older property. The stock capitalization of the road consists of $2,500,000 6 per cent. non-cumulative preferred and $6,000,000 common. No dividends at all are being paid. The difference in price between the Rochester, Syracuse & Eastern bonds and those of the Auburn & Syracuse is accounted for largely in the latter road's ability to earn more in relation to its capitalization. It has outstanding much less stock and bonds, and on the latter (last reported as $1,468,000) it is earning the interest about one and three-quarters times. No. 370. STOCK IN A CHAIN OF BANKS In your I enclose herewith a circular regarding the sale of stock to cover the establishment of banks in a neighboring state. opinion is this stock a good investment for a small wage-earner? No. We note that the proposal is to establish a chain of banks with much the same directorates and controlled through one central institution. This method of banking may be all right within limits, but where it is spread out over an extensive territory it has too frequently been found in this country to involve inefficient, if not reckless, management, and is considered by the best authorities as an evil which should be eliminated entirely, rather than allowed to gain ground. Indeed, it is a practice which the Controller of the Currency only recently set about to stamp out in cases where national banks, the only institutions, of course, over which that official has direct jurisdiction,-are found to be indulging in it. No. 371. PROJECTED ELECTRIC ROAD I wish to invest some money in an electric railroad. Would it be possible for a manufacturing company, or any combination of companies making cars and other railroad supplies, to injure the electric road by refusing to sell it equipment? Or could a more powerful railroad corporation through its influence upon the manufacturing companies injure the road in any way? Because you do not tell us anything about the character of the enterprise in which you desire to invest, the people behind it, its location, the exact nature of the territory which it is to serve (assuming that it is now merely a projected road), and other important things of like nature, we cannot, of course, undertake to discuss the stock or bonds, even from a speculative point of view. If the company has sufficiently strong backing and if it is assured of a sufficient amount of capital to carry its project through to completion and to establish its credit on a sufficiently strong basis, we cannot conceive of any manufacturer refusing to supply it with cars and other necessary equipment with which to carry on its operations. Your questions suggest certain charges that have been made against something which has been called a "money trust," now being investigated by a Congressional committee. This alleged "trust is supposed to be dominated by powerful railroad and industrial interests, who, it is said, do not hesitate to crush pears that such action would inure to the advantage of the interests. But whether such a trust really does exist will remain for the Congressional investigators to discover. Why not write to us again furnishing more detailed information about the proposition in which you have become interested. We should be glad to report whatever specific facts we are able to obtain about it. No. 372. PUBLIC SERVICE CORPORATION BONDS I wish to invest a few thousand dollars where the principal will be safe and the income as high as possible. Your department, I notice, frequently suggest public service corporation bonds as conservative investments. I should like to ask in what manner one may keep posted on the financial condition of the value of the bonds in which investment has been made, public service corporations located in distant quarters and on where the same are not listed on any exchange. By choosing a banking house of the highest standing and with the most experienced and efficient organization, through which to purchase the bonds in the first instance; then, by taking the bankers fully into one's confidence and asking their confidence in return. The careful, conscientious banker nowadays is a hearty advocate of publicity. To all of his clients he is found ready and willing to supply regularly the essential information about whatever securities they buy. He does not feel that his responsibility ceases immediately he has concluded the sale of his bonds. He realizes that satisfied clients are among the best assets to his business. There are scores of high-grade public service corporation bonds based upon solidly established enterprises that are never heard of on any of the exchanges. In fact, by far the majority of such issues are sold directly over the counters of the specialists to individuals whose habit it is to invest money permanently for income. Most companies issuing these bonds make at regular periods comprehensive financial statements which find their way into the hands of the security holders through the distributing bankers, if not through the medium of the financial press. We are not quite sure just how far you might go in giving up quick convertibility, but it may not be amiss for us to say that there are a good many investors who pay more attention to this feature than seems to be necessary. They frequently not only pay attention to it, but they pay for it in many cases, by making unnecessary sacrifice in the matter of income. No. 373. FIGURING "YIELD" ON BONDS Accept my thanks for your reply to my inquiry about United Railroads of San Francisco 4 per cent. bonds. I notice you say that at 68 the bonds yield over 7 per cent. on the investment. According to my way of figuring, they yield less than 6 per cent. Which is correct? Your figure would be correct, provided the bonds were, like stock, of indeterminate maturity. But the life of a bond is an important factor in determining yield. For example, the United Railroads of San Francisco 4's fall due in 1927, at which time they will presumably be paid off, and not at 68, but at 100. During the fifteen-year period between now and their maturity, there must, therefore, be an appreciation of $320 per $1000 bond-an average annual appreciation of about $21.33, which would accrue as a profit to one who purchased at the present price. It is customary to regard this profit as additional income. In the present case it amounts to approximately 31⁄2 per cent, a year on the purchase price of the bond. Add this to the 4 per cent. fixed annual interest, and you have a EDITED BY ALBERT SHAW CONTENTS FOR AUGUST, 1912 Sir Lawrence Alma-Tadema..... Frontispiece Cartoons of the Campaign.. The Progress of the World Facts about Electing Presidents. Why New York Will Support Wilson. 169 Woodrow Wilson-A Character Sketch 177 The Convention Not a Representative Body.. A Glance at Party History. The Southern Delegations.. 131 132 132 133 By HENRY JONES FORD 185 Efforts to Reform the System. 135 Bargaining With the Bosses. 136 "Fixing" the Temporary Roll. 136 The Nominating Conventions of 1912.. 191 TERMS:-Issued monthly, 25 cents a number, $3.00 a year in advance in the United States, Porto Rico, Hawaii, Cuba, Canada, Mexico and Philippines. Elsewhere, $4.00. Entered as Second Class matter at the Post Office Department, Ottawa, Canada. Subscribers may remit to us by post-office or express money orders, or by bank checks, drafts, or registered letters. Money in letters is at sender's risk. Renew as early as possible in order to avoid a break in the receipt of the numbers. Bookdealers, Postmasters, and Newsdealers receive subscriptions, (Subscriptions to the English REVIEW OF REVIEWS, which is edited and published in London, may be sent to this office, and orders for single copies can also be filled, at the price of $2.50 for the yearly subscription, including postage, or 25 cents for single copies.) THE REVIEW OF REVIEWS CO., 30 Irving Place, New York City earnings are available, it seems that interest charges were covered only by a very small margin. The regularly published statements do not make clear just what policy is being followed in the matter of maintenance, depreciation, and so forth, but the road's management seems to be looked upon as one that would follow recognized standards in this respect under ordinary circumstances. The fact that the line is comparatively new would, of course, mean that it would not be necessary to provide for such charges quite so liberally as would be necessary in the case of an older property. The stock capitalization of the road consists of $2,500,000 6 per cent. non-cumulative preferred and $6,000,000 common. No dividends at all are being paid. The difference in price between the Rochester, Syracuse & Eastern bonds and those of the Auburn & Syracuse is accounted for largely in the latter road's ability to earn more in relation to its capitalization. It has outstanding much less stock and bonds, and on the latter (last reported as $1,468,000) it is earning the interest about one and three-quarters times. No. 370. STOCK IN A CHAIN OF BANKS the establishment of banks in a neighboring state. In your I enclose herewith a circular regarding the sale of stock to cover opinion is this stock a good investment for a small wage-earner? No. We note that the proposal is to establish a chain of banks with much the same directorates and controlled through one central institution. This method of banking may be all right within limits, but where it is spread out over an extensive territory it has too frequently been found in this country to involve inefficient, if not reckless, management, and is considered by the best authorities as an evil which should be eliminated entirely, rather than allowed to gain ground. Indeed, it is a practice which the Controller of the Currency only recently set about to stamp out in cases where national banks, the only institutions, of course, over which that official has direct jurisdiction,-are found to be indulging in it. No. 371. PROJECTED ELECTRIC ROAD I wish to invest some money in an electric railroad. Would it be possible for a manufacturing company, or any combination of companies making cars and other railroad supplies, to injure the electric road by refusing to sell it equipment? Or could a more powerful railroad corporation through its influence upon the manufacturing companies injure the road in any way? Because you do not tell us anything about the character of the enterprise in which you desire to invest, the people behind it, its location, the exact nature of the territory which it is to serve (assuming that it is now merely a projected road), and other important things of like nature, we cannot, of course, undertake to discuss the stock or bonds, even from a speculative point of view. If the company has sufficiently strong backing and if it is assured of a sufficient amount of capital to carry its project through to completion and to establish its credit on a sufficiently strong basis, we cannot conceive of any manufacturer refusing to supply it with cars and other necessary equipment with which to carry on its operations. Your questions suggest certain charges that have been made against something which has been called a money trust," now being investigated by a Congressional committee. This alleged "trust" is supposed to be dominated by powerful railroad and industrial interests, who, it is said, do not hesitate to crush pears that such action would inure to the advantage of the interests. But whether such a trust really does exist will remain for the Congressional investigators to discover. Why not write to us again furnishing more detailed information about the proposition in which you have become interested. We should be glad to report whatever specific facts we are able to obtain about it. No. 372. PUBLIC SERVICE CORPORATION BONDS I wish to invest a few thousand dollars where the principal will be safe and the income as high as possible. Your department, I notice, frequently suggest public service corporation bonds as conservative investments. I should like to ask in what manner one may keep posted on the financial condition of public service corporations located in distant quarters and on the value of the bonds in which investment has been made, where the same are not listed on any exchange. By choosing a banking house of the highest standing and with the most experienced and efficient organization, through which to purchase the bonds in the first instance; then, by taking the bankers fully into one's confidence and asking their confidence in return. The careful, conscientious banker nowadays is a hearty advocate of publicity. To all of his clients he is found ready and willing to supply regularly the essential information about whatever securities they buy. He does not feel that his responsibility ceases immediately he has concluded the sale of his bonds. He realizes that satisfied clients are among the best assets to his business. There are scores of high-grade public service corporation bonds based upon solidly established enterprises that are never heard of on any of the exchanges. In fact, by far the majority of such issues are sold directly over the counters of the specialists to individuals whose habit it is to invest money permanently for income. Most companies issuing these bonds make at regular periods comprehensive financial statements which find their way into the hands of the security holders through the distributing bankers, if not through the medium of the financial press. We are not quite sure just how far you might go in giving up quick convertibility, but it may not be amiss for us to say that there are a good many investors who pay more attention to this feature than seems to be necessary. They frequently not only pay attention to it, but they pay for it in many cases, by making unnecessary sacrifice in the matter of income. No. 373. FIGURING "YIELD" ON BONDS Accept my thanks for your reply to my inquiry about United Railroads of San Francisco 4 per cent. bonds. I notice you say that at 68 the bonds yield over 7 per cent. on the investment. According to my way of figuring, they yield less than 6 per cent. Which is correct? Your figure would be correct, provided the bonds were, like stock, of indeterminate maturity. But the life of a bond is an important factor in determining yield. For example, the United Railroads of San Francisco 4's fall due in 1927, at which time they will presumably be paid off, and not at 68, but at 100. During the fifteen-year period between now and their maturity, there must, therefore, be an appreciation of $320 per $1000 bond—an average annual appreciation of about $21.33, which would accrue as a profit to one who purchased at the present price. It is customary to regard this profit as additional income. In the present case it amounts to approximately 31⁄2 per cent. a year on the purchase price of the bond. Add this to the 4 per cent. fixed annual interest, and you have a EDITED BY ALBERT SHAW CONTENTS FOR AUGUST, 1912 Sir Lawrence Alma-Tadema.....Frontispiece Cartoons of the Campaign................ The Progress of the World Why New York Will Support Wilson. 169 Woodrow Wilson-A Character Sketch 177 By HENRY JONES FORD 185 Facts about Electing Presidents. The Great Republican Split..... 131 132 132 The Convention Not a Representative Body.. 133 A Glance at Party History.. The Southern Delegations.. Efforts to Reform the System. 134 Thomas R. Marshall, of Indiana. By THOMAS R. SHIPP The Nominating Conventions of 1912.. 191 140 A New Party: Do the People Want It?.. 197 144 The Growing American Bureaucracy... 201 By JONATHAN BOURNE, JR. Republicans Naturally Progressive. 146 TERMS:-Issued monthly, 25 cents a number, $3.00 a year in advance in the United States, Porto Rico, Hawaii, Cuba, Canada, Mexico and Philippines. Elsewhere, $4.00. Entered as Second Class matter at the Post Office Department, Ottawa, Canada. Subscribers may remit to us by post-office or express money orders, or by bank checks, drafts, or registered letters. Money in letters is at sender's risk. Renew as early as possible in order to avoid a break in the receipt of the numbers. Bookdealers, Postmasters, and Newsdealers receive subscriptions. (Subscriptions to the English REVIEW OF REVIEWS, which is edited and published in London, may be sent to this office, and orders for single copies can also be filled, at the price of $2.50 for the yearly subscription, including postage, or 25 cents for single copies.) THE REVIEW OF Reviews CO., 30 Irving Place, New York City |