Return on investment

“ 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. ”

“ 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. ”

“ Under such conditions it is oftentimes wise to sell out and reinvest the money in other securities which bring a larger net return; or if stocks in general are too high, put the money in the bank and wait for lower prices. The $5000 gain in capital will surely more than cover interest on the original $10,000 investment during the time one has to wait for good buying opportunities. ”

“ If the maximum return on stock is to be limited to 6 per cent, or any fair investment basis, and charges reduced to consumers so that they obtain the benefit of any greater earning power, it would appear that the stockholders occupy an undesirable position. With their possible profits limited, but with no fixt return insured to them and no guaranty against possible loss, it can not be held that the purchase of stock seems attractive. ”

“ What the causes are which make the return to capital greater in one country than in another, and which, in certain circumstances, make it impossible for any additional capital to find investment unless at diminished returns, will appear clearly hereafter. ”

“ The earning power of trust companies has equalled and even exceeded that of the banks, and the stock of those companies which are well established and doing a flourishing business sells at such a premium that investment in it at its market value gives a very low return. ”

“ In other cases, which were probably more numerous, railway-managers attempted to give their stock an investment value through stability of income return. In good years when the company earned 10 or 15 per cent on its stock, their policy was to pay only 5 or 6 per cent in dividends, and hold the rest in their surplus fund in order to have the means of paying the same dividends the next year if only 2 or 3 per cent should be earned. By giving their stock stability of income return they hoped and expected to give it some stability of market price, and thus make it attractive to genuine investors. ”

“ Modern gold-getting by scientific methods compels the permanent investment of an enormous amount of capital, and a moderate return only in dividend is looked for as a rule; thus the balance between acquisition and disbursement is likely to be maintained in the future. ”

“ When the treatment of a man's business surplus is spoken of as an investment problem, it is meant, of course, not his working capital, which should be kept in liquid form for immediate needs, but that portion of his surplus which is set aside for emergencies. ”

“ Once on the highroad of life with a plan of action well defined and a regular income the habit of putting money away should become a fixed procedure. In no other way do we accumulate except by investment, and investment means putting away money at interest or in some project which promises better returns.
If we were to interview a thousand men on the subject of saving and draw upon their experiences we would find that by investing money at interest we pursue the safest course, far safer, in fact, than the seeking of outside investments that promise greater returns. ”

“ 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 number of business men to-day in possession of funds in excess of their private wants and business requirements is far greater than it was ten years ago, and is constantly increasing. These men are confronted with a real investment problem. ”

“ 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. ”

“ It is entitled to see that from earnings the value of the property invested is kept unimpaired, so that at the end of any given term of years the original investment remains as it was at the beginning. ”

“ With what do you purchase necessities and luxuries? We on Earth get the intensive desire to earn, and accumulate money or capital. This desire is a strong driving power which incites us to do good work or service, to invent new and necessary improvements, and to make scientific discoveries. We do all this for gain and profit in moneys and capital, which we save, invest on interest, in property, or in other profitable or risky enterprises, and even speculate with on the future development or increase in value of our investment. We even gamble on chances to win. ”

“ It is very common, for example, when he wishes to make a permanent investment and has no thought of reselling, to find him purchasing [16] securities which possess in a high degree the quality of convertibility. ”

“ Besides these personal incomes, each industry which paid these dividends and profits, through its depreciation, amortization, replacement, new construction, and surplus funds was reinvesting in the industries billions of wealth that would be used in the creation of more wealth. The normal processes of the growth of the modern economic system has forced upon the masters of life the problem of disposing of an ever increasing amount of surplus.
During prosperous periods, the investment funds of a community like England and the United States grow very rapidly. ”

“ It will be seen that the question of maintaining the integrity of the money invested is a matter of great importance and deserves to rank as a fifth factor in determining the selection of investments, altho it is not an inherent quality of each investment, but is dependent for its effect upon general conditions. ”

“ But we speak just as readily of investing, for example, in a house, or in a machine, or in a stock of finished or unfinished goods; and, broadly speaking, new investment, as distinguished from reinvestment, means the purchase of a capital asset of any kind out of income. If we reckon the sale of an investment as being negative investment, i.e. disinvestment, my own definition is in accordance with popular usage ”

“ With the immense increase in wealth in the United States during the last decade and its more general distribution, the problem of investment has assumed correspondingly greater importance. As long as the average business man was an habitual borrower of money and possest no private fortune outside of his interest in his business, he was not greatly concerned with investment problems. ”

“ Invested capital—that is, capital sunk in enterprises which society will recognise as belonging to the old order—will take the alarm and fall in value enormously, while, on the other hand, capital seeking investment will welcome an outlet which has long been its sorest need. Invested capital will in its opposition be further weakened by another consideration. ”

“ 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. ”

“ At present, they do not seek investment outside of corporate limits, and, of course, the money they have been intrusted with, must be about all invested, and cannot be called idle money, or there could be no interest paid to its owners. ”

“ Some companies are now so organized and managed that there is a guaranteed refund, at stated periods, or whenever profits have accrued, of fractions of the invested capital with accumulated interest thereon. ”

“ We must reiterate that if, in the event of giving all to labor, there were no immediate falling off in the amount of capital, such falling off would nevertheless soon come about through mistaken investment, since the shrewd and enterprising, into whose hands capital now usually falls, are precisely those who are best qualified to discover the fields in which investments may be made to the best advantage; for it is by the utilization of such fields that the greatest amount and variety of productions are had, and most is added to the general wealth of the civilized world. ”

“ It is also argued that to determine whether it is better to manufacture or to buy goods in the open market, and whether it is better policy to manufacture by means of expensive machinery and other equipment or by manual labor, interest on investment must be considered. ”

“ When money is increasing in volume and decreasing in value, prices rise, and its investment in productive enterprises becomes more profitable, and as a consequence interest rises. When it is decreasing in volume and consequently increasing in value, prices fall, investment in property and productive enterprises become precarious and unprofitable, and, as a consequence, it avoids them, and seeks investment in bonds and gilt-edged securities, aptly termed "money-futures," which for years have been increasing and continue to increase. ”

“ 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. ”

“ The second step we have taken in the restoration of normal business enterprise has been to clean up thoroughly unwholesome conditions in the field of investment. In this we have had assistance from many bankers and business men, most of whom recognize the past evils in the banking system, in the sale of securities, in the deliberate encouragement of stock gambling, in the sale of unsound mortgages and in many other ways in which the public lost billions of dollars. ”

“ The premiums that shares in projects may bear in the market, are not even a shadow of criterion whereon to found a judgment for investment. This is well known to every discreet man who has an odd hundred to put out ”

“ A person can but eat one dinner in the day; two or three coats are about all he needs for the outer man; he can but live in one house at a time; and, in short, after paying away all he needs to pay, he finds that he has not a little over for—investment. Since our young days, this word investment has come remarkably into use. All are looking for investments; and as supply ordinarily follows demand, up there rise, at periodical intervals, an amazing number of plans for the said investments—in plain English, relieving people of their money. ”

“ It cannot be stated too strongly, however, that safety, freedom from great fluctuations, and ready marketability are always prime essentials to be observed in securing stocks and bonds for temporary investment. ”

“ 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 capital of those who live on the interest of their own fortunes has generally sought and found some fixed investment, such as the public funds, mortgages, or the bonds of public companies, which investment, except under peculiar temptations or necessities, is not changed. ”

“ The annual surplus of production, tho larger than before, is only sufficient to provide for the new undertakings which the growing optimism demands. Interest rates rise moderately in response to the added demand for capital. A few years further along, as business activity increases and success appears plainly to wait upon new ventures, the demand for new capital with which to develop increased facilities and new enterprises exceeds the annual supply of wealth created. Prosperity having increased, another factor commences to assert itself. ”