Investor

“ While these controls apply in many cases to fixed-dollar obligations, like face-amount certificates and the bonds of closed-end investment companies, they are of particular relevance to situations where the investor is committing his funds to the hands of others on an equity basis, with the view that the funds will be invested in securities and his fortunes will depend on the success of the investment. ”

“ Special attention will be paid to the requirements of a business surplus and of the private investor. In the field of private [22] investment two distinct classes can be recognized—those who are dependent upon income from investments and those who are not. Both classes will be considered. For the investment of a business surplus, safety, convertibility, and stability of price are the qualities to be emphasized; for investors dependent upon income, safety and a high return; and for those not dependent upon income, a high return and prospect of appreciation in value. ”

“ If all users of estate planning computers had relations with the same firm, all these minor fluctuations would be in the same direction for all of them. Although the investment mixes would be far from identical, they would be more alike than economic principles require. On the other hand, the investor who has the courage to associate himself with an alternate set of analyses may be comparatively alone in the course he chooses. ”

“ STOCKHOLDERS Or it may be that the manufacturing company does not ask the capitalist to assist, but itself goes to the small investor with a prospectus of the enterprise, and offers to sell stock in the concern at $50 or $100 a share, as the case may be. ”

“ The interest contract between them is one of mutual advantage, in that the enterpriser pays a definite sum to the investor unable himself to apply his productive agents. Immense sums of capital are now put into the hands of small enterprisers, such as Western farmers improving their lands, builders of city homes and business blocks, and small manufacturers. ”

“ If you can tell me of anything better I will sell all of my own Great Midwestern stocks and bonds and buy that instead. I have my own money in Great Midwestern. There’s another Galt you left out. As head of a great railway system I am a seller of securities to investors all over the world. That is how we find the capital to build our things. But as an individual I am a buyer of those same securities. I sell to everybody with one hand and buy for myself all that I can with the other hand. ”

“ True regulation is for the equal benefit of the consumer and the investor, and the only man who will suffer from true regulation is the speculator or the unscrupulous promoter who levies tribute equally from the man who buys the service and from the man who invests his savings in this great industry. ”

“ The larger modern business is less and less attached to particular neighborhoods. A much smaller proportion of investments is made in industries which the investor himself can control or even see in [Pg 343] operation. Business, therefore, in these days is done largely on faith in other men. Especially the investor takes great chances. ”

“ These constitute the important intermediary which transforms stock exchange securities into the basis of bank-loans. The commercial banker buys, in general, not the stocks, but the note of the private banker, broker, speculator, or investor, with the stocks as collateral. If investment bankers, speculators and investors decide to support old ways of doing things, the banks lend on the securities of the old kinds of businesses; if investment bankers, speculators and investors turn to new things, the commercial banks follow suit. ”

“ Finally it is the long-term investor, he who most promotes the public interest, who will in practice come in for most criticism, wherever investment funds are managed by committees or boards or banks. ”

“ Capital then takes hold cheerfully; there is a market for the new securities and a proper basis for fresh commercial development, because investors and speculators have learned from the published daily quotations of these Stock Exchange securities that there is good warrant for the flow of capital into such channels, and that a reasonably safe return will follow an investment in them. ”

“ If a railway or other industry, in launching a new enterprise, had to depend on the chance investors at the time of42 the issue of the securities, it would be seriously hampered. The mere knowledge that at any moment there will be a ready sale on the Exchange greatly increases the circle of purchasers, many of whom may not intend to be permanent investors. The Stock Exchange aids the investment of capital, as the Produce Exchange aids the production of finished commodities. ”

“ The investors provide the capital and share in the earnings and profits; the promoters manage, control and operate the enterprise. It follows that the arrangements whereby the investors' interests are made manifest involve investment contracts, regardless of the legal terminology in which such contracts are clothed. The investment contracts in this instance take the form of land sales contracts, warranty deeds and service contracts which respondents offer to prospective investors. ”

“ It offers a much more attractive field to the investor who desires to place his surplus funds in productive enterprises and share in their profits without having the burdens of active management or the risk of losing his private fortune to satisfy the claims of business creditors should the undertaking prove unsuccessful. ”

“ The stock of a corporation, if limited to a reasonable number of shares and issued only to a few expert investors of high standing, and for tangible considerations, will obviously be considered a safer and more attractive investment than if it be scattered indiscriminately among a class of professional manipulators for stock-jobbing purposes. ”

“ The parent company also held that the securities issued by its operating companies ought to represent legitimate values, not speculative or estimated values based on what the plant might earn in the future; that the intrinsic value of the telephone securities should be made clearly apparent to investors, and that the established integrity of the investment should be maintained by providing ample sinking funds and reserves to cover every contingency. ”

“ Schurz And, therefore, I say so long as the foreign investor cannot be sure that he will have returned to him the same amount of capital, he will not invest. It is useless for gentlemen to close their eyes to this fact. ”

“ The investment banker stands toward a large part of his customers in a position of trust, which should be fully recognized. The small investors, particularly the women, who are holding an ever-increasing proportion of our corporate securities, commonly buy on the recommendation of their bankers. The small investors do not, and in most cases cannot, ascertain for themselves the facts on which to base a proper judgment as to the soundness of securities offered. ”

“ One man, or two, or a hundred cannot make a market, because the immense volume and variety of these securities make it impossible for any unorganized handful of brokers and dealers to determine a fair market price.41 What is required, and what the man whose capital is wanted insists upon, is an organized body of brokers, speculators, and investors competing keenly, seeking to buy cheap and sell dear, gathering and disseminating all the news, and so sharpening the judgment and stimulating the higgling of buyers and sellers as to bring prices to their legitimate level and give them stability. ”

“ Thus, being entirely free from those leading contingencies which invariably surround the career of by far the majority of those establishments which venture into the arena of mercantile contest, depending chiefly on their wits to successfully compete with their associates in trade, therefore our stock must surely meet the wishes of investors, as not only a profitable, but a SAFE investment. ”

“ Persons other than the producer usually supply the necessary financing (ibid.) . Frequently the production is incorporated and shares of stock are sold to investors, or the producer organizes a limited partnership (ibid.) . All the appellees invest in legitimate attractions (pars. 3-7, R. 1-3) . ”

“ I shall put you in a position to make more money and secure more real power than you could possibly obtain in a like time under any other conditions. You know corporations and the stock-market, and you can readily see what the combination of our money and prestige and your knowledge of the market and investors will mean. ”

“ Capital timidly shrinks from trade, and investors are unwilling to take the chance of the questionable shape in which their money will be returned to them, while enterprise halts at a risk against which care and sagacious management do not protect. ”

“ These are sold to investors to obtain the working capital. The amount of stock is limited by the articles of incorporation and must not exceed by the laws of most states an amount conducive to good business. ”

“ When invested capital shall be quite out of the range of buccaneers' actions, it will produce more, increase more rapidly, and the better do its part toward maintaining the wages of labor.
Perversions of the Economic System by the Action of Promoters.—The state will be carrying out its established policy if it shall effectively control the action of promoters in their relation to prospective investors. The man who is invited to become a stockholder has a right to know the facts on which the value of the property offered to him depends. How many plants does the consolidated corporation own? ”

“ Among the bondholders and stockholders are the big life insurance companies, savings-banks, and other institutions that represent millions of small investors, as well as millions of small holders who have themselves invested directly. ”

“ Their holdings of investment securities are kept well within the limits set by their aggregate capital, surplus, and savings funds, and their method of handling commercial business, based as it is on accurate knowledge of their customer's operations and upon the lien upon produce heretofore described, prevents their acceptance, through ignorance, of investment securities under commercial disguise. ”

“ When this corporation was first organized I subscribed for some stock and was in its first board of directors and its vice-president. If there was to be a new source of supply of the commodity I dealt in so largely, it was important I should know of it. As soon as I became satisfied that it was nothing but a scheme to make money by the sale of stock, I resigned and disposed of my holdings to one of the promoters at a profit of eight dollars per share. ”

“ The facilities which these Joint Stock Companies offer for the investment of capital, even of the smallest amount, the temptations which the prospect of large profits hold out, and the low interest obtained on national stock of every description, have attracted a vast body of capitalists, small and great, who have subscribed to these undertakings with the real intention of investment. ”

“ The word 'invested' in itself imports a restrictive qualification. When speaking of the capital of a business corporation or partnership, such as the act deals with, 'to invest' imports a laying out of money, or money's worth, either by an individual in acquiring an interest in the concern with a view to obtaining income or profit from the conduct of its business, or by the concern itself in acquiring something of permanent use in the business ”

“ Those who have subscribed for shares in new companies have to pay up the calls, that is, find the capital which they promised. They are obliged to draw out the money which they had formerly deposited in banks, and then the bankers have less to lend. Manufacturers, merchants, and speculators, who are making or buying large stocks of goods, wish to borrow more and more money, in order that they may have a larger business, the profit seeming likely to be so great. ”

“ For our present purpose it is enough to have shown that the capital, which is the stock-in-trade of finance, is not a fraudulent claim to take toll of the product of industry, but an essential part of the foundation on which industry is built. ”

“ My accumulations had not been invested, and as I had in my business no use for capital, the money remained idle in bank.
Crossing the ferry one morning I was joined by a friend in the employ of a Stock Exchange firm, then well known, but since retired from business.
I had been thinking of an investment and spoke to him on the subject, telling him the amount of money I had to invest. I had in mind the buying of some good bonds. ”

“ In times of continued business prosperity very high rates are demanded for the use of money, because the liquid capital of the country, to a large extent, has been converted into fixt forms, in the development of new mines, the building of new factories and railroads, and in the improvement and extension of existing properties. These high rates have the effect of reducing the price level of investment securities because people having such securities are apt to sell them in order to lend the money so released, thus maintaining the parity between the yields upon free and invested capital. ”

“ The speculating public gets action, likes it, and invests money that might have been used in margin-trading on the New York Stock Exchange or for "investment" in the constantly fluctuating low-priced industrials or higher-priced mining stocks that are sponsored by big interests with New York Stock Exchange affiliations. ”

“ 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. ”