Security (finance)

“ All the other securities of a bank, such as its discounts, personal property and real estate, may become of no value, or may be placed out of reach of the holders of its circulation, so that the only real security for its circulation is what it may have in gold in its vaults. ”

“ As before stated, my objection to all systems of individual banking is that the basis of their issues is at all times liable to pass from the possession of such individuals; whereas, in a national currency—the 18money of the people, themselves in the aggregate the basis and security—there could be no such liability; since, if parts of the security pass from original to secondary hands, it is still the basis of the currency, and could never be transferred beyond the jurisdiction of security by the operations of designing or incapable persons. ”

“ Banks, financial firms, insurance companies, trust companies and stockbrokers with big investment connections will take as much underwriting as they are offered, in many cases without making very searching inquiry into the terms of the security offered. ”

“ The government is justly responsible to the people for all such issues, since it did not require real security from the banks, and government should make reparation therefor.
16This is precisely our objection to any and all forms of bank issues. There can be no arrangement made so perfect in security to her people as to guarantee them absolutely against all hazard, that will permit the banks to make the profits which they seem to think they are entitled to make from the people. In absolute security there can be no profit. ”

“ Broadly speaking, for such investment, a security is required which will combine perfect safety of principal and interest, a good rate of income, ready convertibility into cash, and unyielding stability of market price. The necessity for insistence upon these requirements in the investment of a business surplus will appear upon a moment's reflection. Safety is required in all forms of investment, but is particularly important in the handling of business funds; a good rate of income is always desirable ”

“ But, you will ask, how can money be procured or increased fast and without trouble in a country where there is no commercial enterprise, where labour is interfered with, where capital cannot have a free outlet or investment? An opening has to be found in illicit ways of procuring wealth, and the most common form adopted is the loan of money at high interest on ample security. ”

“ For instance, the banks here advance money freely upon growing crops, wool on the sheep's back, and other similar securities that would hardly be considered as legitimate collateral in America. The usual rate of interest to borrowers upon what is considered fair security, is never less than ten per cent,—twelve and fifteen per cent being most common. ”

“ In our time, to invest such a surplus, at something more than 3 per cent., on the best security that has ever been known in the world, is the work of a few minutes. But in the seventeenth century, a lawyer, a physician, a retired merchant, who had saved some thousands, and who wished to place them safely and profitably, was often greatly embarrassed. ”

“ There are none of the provisions that we have for the responsible safe-guarding of investments or valuable objects,—no fire-proof safes, no banks, no deposit-vaults. Security is best attained by concealment in unattractive and improbable receptacles, and by dividing and distributing the treasured objects. ”

“ By such a system the security of the investment would be much increased, and the foreign investor would have the assurance that his money was safe, even if the business in which it had been invested may have ceased to exist. ”

“ Civilized nations that have reached the stationary economic state, on this account much prefer the greater security and the absence of care which accompany non-personal credit.534 In estimating the ability of the debtor to meet his promise, we must take into account, especially, the disposable character of his resources; otherwise it would be impossible to understand [pg 270] why the merchant may so frequently obtain a loan on his stock equal to its whole value, while the owner of land can place it as security only to the extent of half its value. ”

“ The method, therefore, in common use, and the only one which has been found effective by financiers, is to create a demand for the security, encourage speculation, establish an active market, and dispose of stock on the market as necessity demands whenever financing is required. ”

“ One who invests his money in a business of a somewhat hazardous character is very properly held to have the right to a larger return without legislative interference, than can be obtained from an investment in Government Bonds or other perfectly safe security. ”

“ On the other hand, there has been a rapid accretion of funds, in some instances to the amount of many millions of dollars. The characteristics of a good company are security and assurance at cost. It should sell, not policies merely, but assurance; and it should not make a profit for the capitalist out of the widow and orphan. ”

“ He may have no assets whatever beyond the amount of his deposits, nor may his guarantors; the bank relies simply on the character of the three, and the two securities rely on the character of their principal; and the remarkable fact is, that the security has been found sufficient, that the interest of the men in the institutions and the fear of the opinion of their fellows has produced a display of honesty and punctuality such as perhaps is not to be found in the history of any other banking institutions. ”

“ I do not believe any security in the world can be better than that, and no citizen of the United States, no subject of Great Britain, or of any other country in the world that sends his money here and invests it upon an honest mortgage, has ever lost a cent; and if he can get 8 or 10 per cent., it is twice as much as he could get in Germany or in any other country of the old world. ”

“ When the Government of this great country puts its stamp upon a piece of paper and thus makes it money, then that money is based upon the whole wealth of the country.” That sounds magnificently, and you may think, well, if this country has forty or fifty thousand millions' worth of property, and all that property is mortgaged as security for the value of this fiat money, why should not this security be good enough for a couple of thousand millions of fiat money? ”

“ III.17 It is interesting to observe that the formation of the great modern "trusts" has given a considerable impetus to deposit currency; for the securities of large corporations are more easily used as "collateral security" for bank loans than the stocks and bonds of small corporations or than partnership rights. ”

“ Why is money not hidden and not sought for now? Because people have security for the employment of it, and by the employment of it in creating new produce the nation's stock of capital goes on hourly increasing. ”

“ A breath will make it flutter. How can you expect to restore the national credit, now unnaturally sensitive, while the Nation is still uneasy from those Rebel pretensions which have cost so much? Security is the first condition of Financial Reconstruction ”

“ But if any of these be above or without the reach of the laws, or by reason of their station and figure, it be difficult to get the benefit of the laws, their credit will proportionably abate, because a great part of the security which they can give fails, and they must consequently pay greater interest and procuration for the money that they borrow, and a greater price for the goods that they buy: for, those who deal with them, will always propose to be gainers by the whole, upon computing their delays and hazards. ”

“ I need not urge the propriety of availing yourself of your present situation to procure a loan. You may easily convince the government of the validity of the security, which it is in the power of a growing country, as yet very little incumbered with debt to give. That security will derive new force from our being a commercial people, with whom public credit is almost invariably preserved with the most scrupulous attention. ”

“ How is it that, with property of the most undeniable value on their hands, which they are ready to tender in security, they cannot by any means whatever obtain their accustomed credit? And then we ask them to compare the present state of matters with the past, and point out, if they 116 can, any one period or crisis, before Sir Robert Peel was pleased of his own accord to substitute his banking system for that established by the progressive intelligence of the nation, when money could not be obtained and credit given, at fair but not exorbitant rates, for good and sufficient security? ”

“ The remuneration which is obtained in any country for mere abstinence is measured by the current rate of interest on the best security; such security as precludes any appreciable chance of losing the principal. What a person expects to gain, who superintends the employment of his own capital, is always more, and generally much more, than this. The rate of profit greatly exceeds the rate of interest. (2.) The surplus is partly compensation for risk. By lending his capital on unexceptionable security he runs little or no risk. ”

“ For instance, sometimes stocks and bonds are left with a bank as security for a loan, say. Those securities are in my care; I am responsible for them. They are sealed by the president of the bank in my presence, and my own seal is added in his presence before the securities are placed in the vault. It comes down to this, ma’am: there are two persons responsible for the safety of such securities, and either can call the other to an accounting in the event of any irregularity. ”

“ I shall be pleased to execute all orders with which you may favor me on the above basis, in all securities dealt in on the New York Stock Exchange, reserving to myself, of course, the right to refuse to carry any security I do not care to loan my capital on. Some are risky, some safe, some inactive. All speculation implies risk. ”

“ Trade, however, is limited until money is provided as a means for carrying it on. It is security of property, established by a firm civil government, which makes it possible to hold property in amount indefinitely beyond what one can watch and defend by one's own vigilance. ”

“ What would a man of fair intentions and a commonly clear understanding do in such circumstances? Ought he not first to ascertain the gross value of the estate, the charges of its management and disposition, the incumbrances perpetual and temporary of all kinds that affect it,—then, striking a net surplus, to calculate the just value of the security? ”

“ The more perfect the security, the greater will be the effective strength of the desire of accumulation. Where property is less safe, or the vicissitudes ruinous to fortunes are more frequent and severe, fewer persons will save at all, and of those who do, many will require the inducement of a higher rate of profit on capital, to make them prefer a doubtful future to the temptation of present enjoyment. ”

“ Since Men will always be powerfully influenced in their Opinions and Actions by what appears to be their particular Interest: Therefore all those, who wanting Courage to venture in Trade, now practise Lending Money on Security for exhorbitant Interest, which in a Scarcity of Money will be done notwithstanding the Law, I say all such will probably be against a large Addition to our present Stock of Paper Money; because a plentiful Currency will lower Interest, and make it common to lend on less Security. ”

“ The term 'security' means any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, or in general, any instrument commonly known as a 'security' ”

“ It is a valid asset—a tangible security for one's money—from a business point of view. And Americans or foreigners like myself and my niece, for instance, are securing substantial property and equal return, when we bring large fortunes in our marriage settlements to this country. ”

“ But remember that the rich have their troubles too. I dare say, now, you can scarcely realize what it is not to know where to find an investment which will combine adequate security with a decent interest on one's money. ”

“ That the surplus profits would not be paid out and distributed, but would be held in the business, subordinated to the claims of the original investment, and so very materially adding to the security thereof. ”

“ Let such a man be left another hundred thousand pounds, which he determines not to put into his own business, but invests in some security held to be absolutely safe, and he will find that interest on Capital means not more than three and a half per cent. ”

“ But as it is vital to the prosperity of the entire nation that its currency he incontestably and unquestionably secure, the guarantee of the whole people given through their Government should be the ultimate assurance of the security of their currency. The checks and restrictions upon its issue by banks should provide, therefore, that the liability for loss lie as far as possible with the banks, reducing to a minimum the responsibility, in any event, of the Government. ”

“ This security and consequent risk will differ in the cases of different individuals. The legislation, therefore, that prescribes a fixed rate of interest, beyond which no contracts may go-especially if that limit be, as it usually is, the lowest at which capitalists will loan money on the most approved security-in effect deprives all those, who cannot offer the most approved security, of their right of hiring capital at all. ”