Portfolio

“ You can do it by inducing personal friends to buy a couple of thousand shares of our stock. I have prepared a statement showing what we have done and what we are doing, and an estimate of what we expect to do. Our books and our plant are open for examination by any expert your friends may want to send here. We shall have a big surplus, and the book value of the shares will always be much more than par; but we are going to reduce the price of our car every chance we get, and we are going to provide for pensions and life insurance and bonuses for the men. ”

“ But the Assay Office is in its proper atmosphere. It is a money region. From Wall Street in every direction within the radius of a third of a mile, the business of life is finance in one form or another. ”

“ 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. ”

“ To the man who can hold, and afford to hold, Beitjesfonteins, they are not a bad investment, always providing one can get rid of the present board. I am willing to buy your father’s interest at the price he paid. If I go into the market to buy them, I shall probably be getting Pinlow’s and his ‘precious friends’. As the stock stands to-day, and with the information I have about your father’s holdings, I should say that he stands to lose about forty-five thousand pounds. ”

“ The broker, therefore, is quite as anxious for his clients to make money as they are themselves. More profit, more margin; more margin, more commissions and less risk. There you have it in a nutshell.
The stockbroker says to the public: “My dear sir, here is an open market. Nowhere else can you get such large and quick returns on so small an investment. For these opportunities I charge you the ridiculously small percentage of one-eighth of one per cent., and loan you, besides, ninety per cent. of your investment. Could any man with a proper regard for his wife and children do better by you? ”

“ 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. ”

“ The Inventory of Movable Property or Securities—The capital represented by movable properties, stocks, bonds, shares, etc., is the only kind of capital which lends itself to statistics—The great groups of movable properties: National Funds, Railway Shares, Insurance Companies, Foreign Banks, Mortgage Companies, and agricultural and industrial undertakings. ”

“ 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. ”

“ The capital investor — the individual who in industry loans and risks his capital or a part of it — receives for his capital a return in the form of interest; but he receives something more. As an investor, he becomes entitled to a voice in the control of the industry in which his investment is made. The life or labor investor — the worker who in industry loans and risks life, or gives to industry that part of it described as labor — 'receives for his labor, which is the use of his life and skill for the time in which labor is given, a return in the form of wages. ”

“ The agents of production, land, capital, and labour, derive their value from the value of their products, ultimately, therefore, from the utility of those products. As stock is valued by the expected dividend, so is the field by the expected crop. ”

“ If the stock is much larger at the end of the second year than at the end of the first, it might indicate that the business man is speculating in merchandise, that he considers the buyer’s market during the year particularly favorable and has laid in an abnormally large stock. A banker with large experience in similar businesses can formulate a fairly accurate judgment of how much working capital a concern should have invested in merchandise. ”

“ The privilege is open to Stockholders immediately upon investment being made.
What lover of good books can not afford to take at least ten shares? How many friends might, with advantage, take a hundred, or more shares? A million dollars capital would not suffice to manufacture the books our patrons are urgently calling for: we are doing now an immense business for the amount of our capital, which business will be increased as our resources are enlarged.
76 Per Cent. ”

“ Perhaps, however, the Stock Exchange can best be defined and described as a market. Just as Smithfield is the market for meat and Covent Garden the market for flowers, fruit, and vegetables, so is the Stock Exchange the market for stocks and shares. ”

“ 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. ”

“ Simultaneously with the publication of the statement, a process known as "making a market" goes on in the Stock Exchange. The promoter, who holds all the shares, arranges with a jobber to sell them. He probably gives the jobber a call on the shares at a certain price, and anything which the jobber can obtain for them over that is his profit. Then the promoter instructs some brokers to buy the shares and others to sell them, and in this way he produces a semblance of activity. It can easily be arranged that the price shall rise rapidly enough to attract attention. ”

“ The number of useful and productive laborers, it will hereafter appear, is everywhere in proportion to the quantity of capital stock which is employed in setting them to work, and to the particular way in which it is so employed. The Second Book, therefore, treats of the nature of capital stock, of the manner in which it is gradually accumulated, and of the different qualities of labor which it puts into motion, according to the different ways in which it is employed. ”

“ 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. ”

“ What are known as "markets" are groups of jobbers distributed about the house, each group having its own particular dealings, one in Government Stocks, another in English rail- ways, a third in Foreign securities, and so on. A broker having received an order from a customer to sell £1,000 Great Eastern Railway Stock, would go to the English railway group and inquire of a jobber the price or quotation for Great Easterns, without disclosing whether he wants to buy or to sell. ”

“ He owed all he had to Wall Street, and his career illustrated, more than any other has ever done, how fertile a field for fortune making Wall Street may prove to a sagacious man, of untiring industry, who knows how to cultivate it, and can see and avail himself of its splendid opportunities. ”

“ Every corporation whose securities are listed on the stock exchange is obliged to make a full and comprehensive report to the exchange at least once a year, and these reports can be found in any brokerage office; they are always open to public inspection, and no one need buy any stock or [91] bond without first satisfying himself regarding the nature of the industry, capitalization, earnings, management and other details. ”

“ This broker's shop was the resort of scores of people of small means, trades-folk, clerks, salaried dependents and some women, keen to acquire from the fluctuations of the speculative markets a few crumbs of the huge gains garnered by the magnates of Wall Street, of which they read emulously in the newspapers. To put up one's thirty dollars, and to have one's margin of venture or profit wiped out within twenty-four hours, was the normal experience, sooner or later, of ninety per cent. ”

“ A dealer in dry-goods in the city of New York has returned as the income of a single year a sum half as large as the whole capital invested in the establishment of the Harpers. If the signal successes of publishing—successes which are the result of the rarest conjunctions of talent, capital, experience, and opportunity—are represented by incomes of twenty and thirty thousand paper dollars a year, what must be the general condition of the trade? ”

“ 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. ”

“ My friend, who was a most plausible talker, had, I understood, made considerable money in Wall Street, and when he told me of a movement in certain stocks then being manipulated for a rise, through his office, I was at first interested and then carried away with the desire to enter what seemed such an easy road to wealth. ”

“ To [21] which the broker calmly replied, “It’s my business to take orders; not to give directions to a man of your understanding.”
When the American Hide and Leather Company was formed a number of years ago, a prominent Boston leather merchant of my acquaintance, sold his business to the new organization for a round million dollars in preferred stock and bonds, and in the course [22] of the next few years of more or less restless inoccupation he devoted himself to a systematic study of investment securities and general stock market conditions. ”

“ 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 my business did not keep me in the city I should like very much to make my residence there."
"What might your business be?" asked the old man, with natural curiosity.
"I am a broker, sir, in Wall Street. Of course you have heard of Wall Street." ”

“ In fact, the great aim of the book is to place Wall Street in its true light before the eyes of the world, and help to efface the many wrong impressions the community have received regarding the method of doing business in the great financial mart to which the settlement of accounts in all our industry, trade and commerce naturally converges. ”

“ Hence we see that just as every farmer in the West and every cotton-grower in the South must have a stable market for his products, so every laborer in our great industrial field is directly concerned with the maintenance of a stable market for the securities of the company that employs him. The interests of one are the interests of all, and speculation, in one form or another, underlies all industrial progress. ”

“ 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. ”

“ In speaking of the conditions under which speculation may be successfully pursued as a business, it must be understood that we are referring to the one man in the hundred—the professional operator—who will frequently in the elaboration of his arrangements find it necessary to be in the markets himself, gaining what advantage he can by personally dealing either as a jobber or a broker. ”

“ Under the head of investment of Capital will be considered stock of every description, all Implements of Husbandry, and other Articles which may be applicable to the purposes of pn>ductive industry, or which may be necessary for the establishment of the Settler on the Land where he is to be located. The amount of any Half-pay or Pension which the applicant may receive from Government, and which he may be prepared to invest as before mentioned, will also be considered as so much Capital. ”

“ 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. ”

“ 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. ”

“ But with speculators the direction should be, “Do as they do, but not as they say.”
The chief form of speculation is in stocks. These stocks may be railroads, mines, wheat, corn, cotton, wool, tobacco, oil, gas, coal, and, in fact, almost any industry where capital has constantly vacillating values. We have room to mention only a very few:
942. City Bonds.—These are generally among the best securities for investment. The element of speculation comes in when they are bought below par in the belief of an early rise. ”