FINANCIAL NEWS FOR

INVESTOR

FOR THE

EVEN to begin to understand a subject income. This is a simple matter, requiring no one must give it close attention, and highly technical knowledge to state or underfew of us have the time to do that. So it stand, but even well educated investors often would not be at all surprising if the average overlook considerations which it is the busiman and woman, not excluding those who are ness of the reputable dealer to attend to. intelligent in business affairs, were confused Much has been written about the recently by all the talk about the so-called "Money formed Investment Bankers Association of Trust" into supposing that almost every America, but not enough attention has been bank, banker, and dealer in securities were called to the fact that its president is a Chipart of some dim, shadowy system which cago banker, and that New York does not controls the financial destinies of the nation. preponderate in its membership and official Most of us do not care a rap about "financial staff. If there is a Money Trust, most citidestinies," but there are many busy, earnest men and women who invest their savings in bonds and stocks and who would not like to believe that the gentlemen from whom they purchase securities are dominated by a 'Money Trust," or any other kind of a trust. Disgruntled financiers, lawyers with political ambitions, and professional magazine writers and newspaper reporters, as well as politicians, have recently "discovered" with great hullabaloo a by no means novel fact, namely, that large corporations rarely issue big blocks of bonds without the help of a comparatively few underwriting houses, mostly situate in New York City. But it does not follow by any means that the dealer who distributes securities directly to the individual investor is necessarily a trust-ridden or dependent being. Perhaps he prefers to be on amicable terms with the great international underwriting and syndicating houses, but this does not prevent him from competing in the liveliest way for customers with other investment dealers.

In no business is there more active and intelligent competition than in investment banking and this competition has largely taken the form of improving the service which the investor receives. Reliable dealers in an effort to increase their operations have, by way of recent illustration, adopted the plan of appealing to investors of classified ages. The man of thirty obviously wants a different investment from that which would be most suitable for the man of sixty or the woman of forty. For the younger man, future appreciation in price should occupy a relatively higher rank than with the elder buyer who could usually afford to sacrifice price enhancement and convertibility for perfect safety and good

zens would locate its headquarters in the metropolis. There has always existed much prejudice against the great financial institutions of New York. One reason the financial fakir and swindler has been able to dispose of so many worthless stocks has been this prejudice against Wall Street, which unfortunately included the reputable bankers. But the number of high-grade investment dealers is increasing so rapidly in the West and their influence in the national organization is so substantial that the feeling against these men as a class is sure to grow less as their habitat ceases to be solely in this city. More and more of the "financing" of public-utility and industrial companies is being done by Middle Western bankers, a development which makes for competition and operates against sectional prejudice.

It does not always appear that the ability to save money and the ability wisely to invest it go together. But recent advices from Switzerland show that in ten years the amount of deposits in savings banks per capita has increased from $59.64 to $86.46, while there has been decided improvement in quality in at least one important class of securities purchased. "Swiss investors," writes ConsulGeneral R. E. Mansfield from Zurich, “have been imposed upon in a great many instances, especially in the shares and bonds of new industrial concerns and mining companies, offered by clever promoters, which resulted in a prejudice against foreign securities in general and American securities in particular. But in the past few years the business has assumed a more conservative form, and investors now have an opportunity to obtain desirable securities through reliable local bankers and brokers, who offer to their cus

tomers every facility for investigation and well placed therein. The man who can afford obtaining reliable information concerning the to take a big risk in return for the possibility properties back of the bonds and shares they of a 20 per cent. income is the man to supply are offering. The result has been a general the capital, and in thus placing his money he improvement in the market, and a decided is a business man or a speculator, not an inincrease in the sale of the better class of American securities in Switzerland.

vestor. Telegraphic despatches have just told of a $1,000,000 stock dividend in addition to the regular quarterly 21⁄2 per cent., which the Chalmers Motor Company has declared to its shareholders. But in the same paper were items about the bankruptcy of the Knox Automobile Company, and the Thomas Motor Car Company. A day later came tentative plans of reorganization of the big United States Motor Company, whose ignominious failure brought heavy losses to so many.

Theory and practice coincide in teaching the rashness of investing in new or untried ventures. In this department last month was briefly related the story of the marvelous stock profits which dissolution of the old Standard Oil combination had effected. But extreme caution was advised in purchasing these shares until at least a year's time had elapsed. In the last month up to the date of this writing there have been many violent declines in these stocks, in one case In 1899 there were manufactured $4,748,extending to 200 points. Several of the ooo worth of automobiles in this country, stocks have risen, but the declines have been while in 1910 the output was valued at more striking and numerous.

No one can gainsay the basic importance of the petroleum industry, and the same statement may be made in regard to the automobile business. But it does not follow, in the present stage of the Standard Oil companies or the various automobile manufacturing concerns, that investment capital is

$249,202,000. These census figures indicate how the industry has grown. Perhaps when its growth has ceased to be of the mushroom variety, and when efficiency in shop work has taken the place of the present mad rush to turn out cars at any cost, then it may be possible to recommend the securities of automobile companies as reasonably safe investments.

TYPICAL INQUIRIES AND ANSWERS

No. 399. ONE WOMAN'S INVESTMENTS

I have invested in Southern New England Telephone shares, New York, New Haven & Hartford stock, the shares of a national bank in a New England manufacturing city, and in real estate mortgages. In three different Eastern savings banks I have several thousand dollars, brir zing 4 per cent. Should I invest some of this money? If so, what are the best things, in your judgment? Would you buy municipal, or industrial bonds, or preferred stock? Tradition favored savings banks in our family, but I bought the New Haven and Telephone stocks. Did I choose well?

served to furnish less current excuse for them. While there seem to be, still, a good many uncertainties in the situation, the belief prevails that no change will be made in the New Haven's dividend policy, at least in the immediate future. You might withdraw for investment a part of the money you have on deposit in the savings banks at 4 per cent., leaving, however, a sufficient amount-perhaps half-to fall back upon, in case you should happen to need "ready cash." On the part withdrawn, you should find little difficulty in increasing the income by approximately 1 per trial bonds, with few exceptions, and preferred cent., and still be assured as to its safety. Indusstocks, as a class, are more suitable for an active bonds would do very well for your purposes business man than for a woman. Municipal although it would be difficult for you to find much of a choice among such securities, selling on a 5 per cent. basis of yield. Railroad bonds that yield over 41⁄2 per cent. are, for the most part second grade, and to a certain extent speculative. A type might advantageously turn at this time is that of high grade security, however, to which you represented by first mortgage bonds on well established public service corporation enterprises. We sible bankers in this field of investment. suggest your investigating the offerings of respon

Your last question we should be inclined to answer at once in the affirmative, so far as the telephone stock is concerned. But as for New Haven, we think that only the future can give an accurate measure of your judgment. Possibly, we may not be telling you anything you do not already know, when we point out that for the last two or three fiscal years, the New Haven has not been able to show net earnings sufficiently large to cover entirely the requirements of its 8 per cent. dividends. Indeed, the road's management has been subjected to some pretty severe criticism for its financial policies, in general, and incidentally, for maintaining the 8 per cent. rate, while it continued to report deficits, which for a younger and less respected company, would have been considered more or less alarming. A short while ago there were frequent rumors that the management was beginning to see that it might be good business on its part, if the dividend disbursements were made at a lower rate; but these rumors were persistently, and officially denied, until more recently, a de

No. 400. PARCEL POST AND THE EXPRESS
COMPANIES

I should appreciate having your opinion as to what effect

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(One of the most famous churches in Europe, the celebrated San Sofia (to give it the Moslem name) in the midst of the Mohammedan quarter in the heart of Constantinople, is the holy ground of the Moslem, and has been the magnet which has drawn every Christian invader since the Turks entered Europe. On May 29, 1453, the triumphant Sultan Mohammed II rode on horseback into the Christian church of St. Sophia and converted it into a Mohammedan mosque. San Sofia was built in the sixth century by Justinian the Great. It is one of the most remarkable monuments of the genius of Christianity both from an architectural and artistic point of view. For nine hundred years it was the glory of Christendom. Since its capture by the Turks it has been one of the glories of Islam. It will be the supreme object to any triumphant Christian army entering Constantinople, and its reconversion to a Christian church would stand in the eyes of millions of pious Catholics of both rituals as a symbol of the final triumph of the Cross over the Crescent)