Financial agent

“ The primary object of a manufacturing business is to produce, and if that objective is always kept, finance becomes a wholly secondary matter that has largely to do with bookkeeping. My own financial operations have been very simple. I started with the policy of buying and selling for cash, keeping a large fund of cash always on hand, taking full advantage of all discounts, and collecting interest on bank balances. I regard a bank principally as a place in which it is safe and convenient to keep money. The minutes we spend on a competitor's business we lose on our own. ”

“ One of those principles is what the President and the Secretary spoke about today, which was how do the American people feel confident in a financial system where they become -- through extraordinary assistance -- a lender to a bank in order to stay healthy in this financial system. ”

“ To enhance competition in the financial services industry by providing a prudential framework for the affiliation of banks, securities firms, insurance companies, and other financial service providers, and for other purposes. ”

“ Through these agencies the banks are constantly placing as relatively permanent investments securities which they have bought or have aided "to float" or which they handle only as commission agents. In any case the real investment banker is bringing to his task special training and a high sense of his professional obligations, and is employing the services of statisticians, financial experts, and of practical engineers to determine exactly the fundamental conditions of each investment. ”

“ With the third method a permanent increase is secured in the capital funds available for use in the business. Financial policy, governed by the needs of the business and its markets, will always dictate the method to be used for extinguishing or contracting a debt. ”

“ If a banker has funds deposited with his correspondent upon which he can draw, well and good: if he has no balance with the agent, he must either provide the wherewithal to meet the bills which he has drawn, or, alternatively, he can instruct the agent to draw on him in reimbursement. ”

“ The former mode involved an inquiry into the whole of the financial operations of the bank, its several liabilities, and its available resources; often a complicated and difficult undertaking, and, at best, of uncertain results. ”

“ But the chief selling agent of the corporation has found it necessary, in order to keep the business going, to incur huge expenses for entertaining his customers, finds it necessary to incur great travelling expenses, to use only the most expensive hotels, and, incidentally, to drink a great deal more than his personal inclinations would call for, in keeping the business for his house. I waive discussion of the extraordinary fees which a trust promotor makes, in effecting a consolidation of big business units,—a process of exchange. ”

“ What the Court decries in the investment fund is the combination of three banking operations, each concededly permissible: acting as agent for the customer, purchasing for that customer, and pooling assets. ”

“ Is it for the best financial interest of the company to borrow on short or long time, to create a floating or a funded debt, etc.—these points require consideration and can, of course, be answered only in the light of the conditions prevailing in each case as to the status of the working capital requirements. ”

“ They soon discount paper for themselves and other stockholders of financial abilities. With this they buy more property to secure more stock, to get more discounts, to buy more property, to secure more stock, etc., etc., and finally they are able to write up a very respectable capital upon which they are permitted to issue double the amount. * * * So long as a few men can draw a profit of more than fifty per cent. ”

“ You have read the enticing overstatements in your newspapers, financial papers, and company reports, you have listened to professional tipsters, financial wizards, or your bank's financial expert and adviser offering you a lifetime opportunity to purchase investments supposed to pay good interest and dividends. ”

“ No member bank shall act as the medium or agent of any nonbanking corporation, partnership, association, business trust, or individual in making loans on the security of stocks, bonds, and other investment securities to brokers or dealers in stocks, bonds, and other investment securities. ”

“ The financial organization is the medium by which the various parts of the industrial and commercial organism are held in harmony. It is by the financial organization that capital is collected and distributed, that the friction of exchanges is reduced to a minimum, and that time is economized, through credit, between production and consumption. The financial system furnishes three indicators—prices, the rate of discount, and the foreign exchanges—through which we may read the operation of economic forces now that their magnitude makes it impossible to inspect them directly. ”

“ Of this number, a larger proportion than in any other country are brokers in the strict sense of the word, buying, selling, or exchanging money or its equivalents, and managing credit so that others may turn it into capital. ”

“ The moneyed capital thus employed is invested for that purpose in securities by way of loan, discount, or otherwise, which are from time to time, according to the rules of the business, reduced again to money and reinvested. ”

“ The big industrial combinations in America have contributed to the business of the trust companies as registrars or transfer agents for capital stock, agents for the issue of bonds and payment of interest thereon, agents for underwriting and distributing new securities, and depositories of securities and cash under plans of reorganization or while held in escrow. ”

“ Associated with the promoter in the organization of these combinations have usually been bankers or other financiers who stood ready, for an amount of stock or other promised profit sufficiently large to compensate them for their risk, to furnish to the combinations cash sufficient to start the business and to provide other needed capital. ”

“ This class of business, of course, is absolutely safe; so the customer, if he cannot come to terms with the manager, is able to take his account to the cheapest market, always remembering that it is never wise to bank with a second-rate firm, whatever advantages may be offered. ”

“ The original function of the investment banker was that of dealer in bonds, stocks and notes; buying mainly at wholesale from corporations,7 municipalities, states and governments which need money, and selling to those seeking investments. The banker performs, in this respect, the function of a merchant; and the function is a very useful one. Large business enterprises are conducted generally by corporations. ”

“ The advantages of the Bank may consist in this: in the profits of the contracts made with Government, which should bear interest to be annually paid in specie; in the loan of money at interest, say six per cent.; in purchasing lives by annuities, as practised in England, etc. The benefit resulting to the Company, is evident from the consideration, that they may employ, in circulation, a great deal more money than they have specie in Stock, on the credit of the real property which they will have in other use. ”

“ As the customer’s loan or advance is well secured, and as the banker will only advance to the extent of 90 per cent. of the market-price on the condition aforesaid, he is only willing to pay Bank rate upon the sum he borrows. ”

“ Such business cannot be included in the commercial affairs of the country, economically speaking, because they are essentially trust transactions, and the funds, generally, belong to the investment class. ”

“ The fact that the borrower pays interest while the bank undertakes a noninterest-bearing obligation, or pays relatively low interest, explains in the main the gains attending the business of commercial banking. ”

“ The man who possesses the right class of securities should, therefore, take them to the cheapest market, and the owners of the less marketable varieties might remember that from 41⁄2 to 5 per cent. per annum on the overdraft and 1⁄8 per cent. commission on the turn-over are very full rates, which may often be considerably reduced when the customer, whose credit is good, does a large and profitable business. ”

“ The stockholders in every corporation or joint stock association for banking purposes issuing bank notes, or any kind of paper credit to circulate as money, shall be individually responsible to the amount of their respective share or shares of stock in any such corporation or association for all its debts and liabilities of every kind. ”

“ Before the investment banker underwrites the issue, or makes his purchase from the corporation—before the bonds are offered to the public—there is always a painstaking and minute investigation of the new security from many different viewpoints, made by and in behalf of the banker. ”

“ It is the invariable custom in all stock subscriptions for the corporation which is being offered for sale, or the bank or bankers assuming responsibility for the proposition, to set forth at length the facts essential to a proper understanding of the enterprise: if a new corporation, its reason for existence and the security offered; if old, its history and the immediate purposes for which additional funds are asked. It is the same in finance as in ordinary business. ”

“ A bank which is caught short of cash during a crisis must apply for assistance to the Bank of England, and the Bank, which at so critical a time is the only market for securities in existence, would, before making it an advance, demand to see its securities. ”

“ When banks lend on collateral security of corporation stocks to the buyers of those stocks, they are, in effect, financing the corporation itself. [483] Industries differ widely in the extent to which they depend on the money market for their finances. The difference depends often less on the nature of the industry than on the type of the industrial organization. An individual farmer cannot get the bulk of his credit that way! ”

“ All stock brokers are large borrowers in their business, but here was an instance in which this universal custom was given as an excuse for not making a loan of five thousand dollars to a friend in trouble. ”

“ I know the intrinsic value of the chief securities in the market, so, by lending conservatively and keeping an eye on the Stock Exchange, I can realise at once in case of a decline if sufficient margin is not instantly placed in my possession to protect the loan. ”

“ Whenever makers of securities or investors require all or any of these three services, the investment banker is needed, and payment of compensation to him is proper. Where there is no such need, the banker is clearly superfluous. And in respect to the original issue of many of our state and municipal bonds, and of some corporate securities, no such need exists. ”

“ He achieves the Stock Exchange Crowd without difficulty and moves on up into the Banking Set composed of trust company presidents, millionaires who have nothing but money, and the élite of the stockbrokers and bond men who handle their private business. ”

“ As each office, also, has business special to itself, with its own peculiarities, its own interests, and its own mode of investment, any detailed statement might be dangerous, and form the groundwork for rivals to copy or to criticise. The points of chief note are the capital, the amount of liabilities, and the annual returns; and if the endeavour were made to show the funds in proportion to the risks, instead of endeavouring to procure a large show of business at any price, the object of ambition would be the accumulation of capital. ”

“ A few honest planters desirous of promoting the improvement of the country, which the bank promises, take stock in good faith and pay it up in bona fide capital. Those, however, who are experienced in these matters pay up as little as possible, but as the latter are financiers they are elected to manage the bank. ”

“ All persons in business are occasionally, and most of them constantly, borrowers: while all persons not in business, who possess monied property, are lenders. Between these two great bodies there is a numerous, keen, and intelligent class of middlemen, composed of bankers, stockbrokers, discount brokers, and others, alive to the slightest breath of probable gain. ”

“ Impelled by the notion that here was a vocation which required no special knowledge or attainments, and very little capital, which was pleasant, gentlemanly, and not unduly confining, and which promised large returns almost in the twinkling of an eye, hundreds and thousands of young men became brokers—chiefly stock-brokers, but also cotton-brokers, note-brokers, real-estate-brokers, insurance-brokers, and brokers in nearly everything. ”

“ And besides, a banker, dealing with the money of others, and money payable on demand, must be always, as it were, looking behind him and seeing that he has reserve enough in store if payment should be asked for, which a merchant dealing mostly with his own capital need not think of. ”

“ It is, of course, well known to you that in a successful banking business as much depends upon our being able to find remunerative investments for our funds as upon our increasing our connection and the number of our depositors. One of our most lucrative means of laying out money is in the shape of loans, where the security is unimpeachable. ”

“ The most common case of the "bearer of options" function arises when men hold money, liquid securities of low yield and stable value, short loans, call loans, or bank-deposits, waiting for special opportunities in the market. ”

“ A large part of the business of investment banking in the United States is conducted by corporations and firms organized for the purpose of buying and selling investment securities, especially bonds and mortgages. ”

“ It is the practice of private bankers connected with the stock exchanges, and the practice of brokers, who are, for many purposes, bankers, especially those who allow their customers to check on their accounts. ”