From the viewpoint of the speculator, money conditions require constant
consideration. It goes without saying that no sustained bull market is
possible unless money conditions favor such a movement. We find that
at the end of a period of inflation, the credit situation is always
strained, while a general recession in business will usually cure the
evil.
The student may enter this large and important branch of the subject
as deeply as he likes. There are many excellent works dealing with the
various phases of the subject, and the question has been so long and
carefully studied by writers, that many important points have been
established so definitely as to admit of little diversity of opinion.
The bank statement which is issued weekly by the New York Clearing
House, is eagerly scanned by traders, but it is not always the case
that this scrutiny is thorough or enlightening. The statement at its
best, cannot be considered more than a barometer, and its showings are
by no means exact, as it is based on a system of daily averages. That
is to say, the banks figure their loans, deposits, etc., for each day
of the week, and report the averages to the Clearing House. This method
often leads to a false showing. Commenting on this fact, Mr. S. S.
Pratt in his book, “The Work of Wall Street,” says:
“A striking illustration of the effect of the law of averages upon
the Bank Statement was given in September, 1902. The statement of
September 20 reported a loss in cash of $7,300,000, while the actual
loss, so far as it could be estimated, was only $3,600,000. The
statement of September 27th, on the other hand, reported a gain in
cash of $1,790,000, while the apparent loss was $4,000,000. The former
statement reported a deficit in reserve; the latter a surplus.”
It is the practice of many speculators to examine the bank statement
merely as regards the changes made from week to week, without reference
to the more important totals. A decrease in reserves is considered an
evil, etc. There is something in this of course, but such methods and
deductions are incomplete and insufficient. A decrease in reserves when
the surplus is very large may be practically meaningless, while the
same amount of decrease when reserves are small may be significant. It
is a good deal like the difference between a man spending a dollar when
he has a hundred, and spending his last dollar.
The most important general information to be gained from the bank
statement, is by a comparison of loans with deposits, and specie with
loans. We may thus arrive at a fairly correct idea of the state of
trade and the expansion of credits. If we find that loans are in excess
of deposits, and the percentage of specie small, we may, with certain
qualifications, deduce inflation; while on the other hand, the extent
of liquidation may be judged in case these conditions are reversed. As
an example of this process, the following historical facts are given.
In 1890, twenty stocks listed on the New York Exchange were selling
at an average price of about $87 per share. The percentage of loans
to deposits was about 95% and the percentage of specie to loans about
20%. In November of that year, loans advanced to 102% as compared
with deposits, and specie declined to about 18% of loans. The stocks
mentioned declined to an average price of $64 per share, and later in
1901 to about $61 per share. From 1891 to 1893 there was some alternate
improvement and retrogression in money conditions, all of which was
accurately reflected in stock prices.
In 1893, the proportion of loans to deposits rose to about 109%, and
proportion of specie to loans declined to 13%. The average price of the
twenty stocks reached about $47 per share. (The panic of 1893).
In 1894, the proportion of loans to deposits fell to 80%, and specie
to loans rose to 30%. This was due to the liquidation of 1893. Stock
prices showed some betterment, rising to about $57 per share. The
severe drubbing of 1893 had made public investors nervous, and had in
many cases incapacitated them for stock market operations. That was to
come later.
In 1896, the proportion of loans to deposits rose to 102%, and specie
to loans fell to 10%. Stocks reached their lowest level in July of this
year ($42 per share for the twenty stocks mentioned).
From 1896 to 1898, a gradual improvement was apparent. Through all
this period stock prices faithfully reflected money conditions. In
July, 1898, the proportion of specie to loans rose to 30% and loans to
deposits fell to 83%. Stocks began advancing and in March, 1899, the
average price of the twenty stocks considered, was about $85 per share.
In June, 1900, the average price of the twenty stocks considered, was
about $75 per share. The proportion of specie to loans was about 22%,
and the proportion of loans to deposits was about 90%. From January,
1901, until September, 1902, money conditions did not improve, but
stocks continued to advance. There were large crops and a general wave
of expansion and prosperity swept the country. In September, 1902, the
proportion of loans to deposits was 99%, and the proportion of specie
to loans about 17%. Meanwhile stocks were high--$128 per share for
our twenty stocks. Conditions, though temporarily ignored, asserted
themselves in 1903, and in September of that year, the average price
of the twenty stocks was about $88 per share; the percentage of loans
to deposits 101% and specie to loans 19%. The money situation had not
changed materially, but the stock market was making a deferred payment.
In August, 1904, the proportion of loans to deposits had fallen to 90%
and specie to loans had risen to 25%. The stock market was steadily
advancing, and in January, 1906, stocks reached their pinnacle--$138
per share for the twenty securities considered.
It will be observed that while stock market movements do not always
immediately reflect good or bad conditions in the financial world,
the effect is ultimately felt. We are pretty safe in assuming that
whenever loans are unduly expanded and the percentage of specie is
small, these conditions must be corrected either by a halt in business
or by liquidation; and the word liquidation here means a cleaning
up in other lines, as well as in the stock market. It is sometimes
the case that after the stock market has suffered a severe decline,
there is little improvement in the monetary situation as shown in
the bank statement. In January, 1907, for example, the percentage of
loans to deposits was about 102%, and specie to loans about 17½%. The
average price of twenty active stocks at that time, was about 130. At
the present writing (June, 1907) those same shares have fallen to an
average price of about 101, and there is no appreciable change in the
relation of loans to deposits, or specie to loans. On June 8th, 1907,
the bank statement showed loans to deposits 102%, and specie to loans
a little below 19%. This state of affairs would naturally lead to the
belief that unless we are vigorously assisted by some powerful factor,
such as good crops, we now face a period where either a decided slowing
up or an actual recession in general business is imperative. On this
theory, fortified or modified by a study of extraneous effects, the
speculator or investor may gain a valuable knowledge of probable future
movements in the stock market. If he decides that the case is a bad one
and that a set-back in business will occur, he may argue that, even if
stocks are low in price, there is little hope of a material upward
movement in any quarter. It would also be evident that the industrial
shares would suffer more in price than the railroad shares; for, under
present conditions, a decline in the price of products generally helps
the railroad corporations to some extent by permitting advantageous
purchases. For instance, if finished steel and iron products decline in
price, the railroads might be enabled to carry out projected extensions
to better advantage than otherwise, while the manufacturing companies
would suffer a considerable loss of profits. It is, of course, true
that a recession in business is felt in all lines, but as the selling
rate of transportation is more fixed than prices of commodities, and as
the producing companies gain less by a recession in the prices of the
commodities they _buy_ than do the railroads, the industrial stocks are
more adversely affected. This may appear as a sort of compensation for
the fact that while rates for transportation do not advance as easily
as prices of commodities, neither do they fall as rapidly in periods of
depression.
In examining the bank statement as a barometrical showing of money
conditions, it should be remembered that an increase in deposits does
not mean an increase in cash. The bank statement may show an increase
in loans of $1,000,000 and an increase in deposits based on these
loans. That is to say, $1,000,000 may have been borrowed on commercial
paper, and the proceeds passed to the credit of the borrowers.
Commenting on this fact, Theodore Burton says:
“But in the modern development of banking the actual
money deposited is much less important in determining
the amount of deposits, because so large a share
of them represents credits obtained by loans, etc.
These credits are transferred upon orders executed by
depositors, and furnish a substitute for currency.
In proportion as payments and settlements are made
by checks, drafts, and bills of exchange, deposits
maintain an increased proportion to the amount of
currency in circulation. This class of deposits
increases prior to a crisis rather than diminishes,
because loans increase.
“In the reports of national banks, there is a
striking correspondence from year to year in the
volume of deposits and that of loans and discounts.
Deposits show more frequent fluctuations, but rise
and fall in general accord with loans and discounts.
This correspondence is easily explained. Another
distinction should be noted. Some deposits are the
result of completed transactions, and are based upon
the proceeds of sales made, amounts realized from
investments, etc. Others merely represent loans or
discounts the proceeds of which are entered to the
credit of the borrower. Before every crisis there is
an unusual proportion of deposits which are based
upon loans. If in bank statements there could be
separate columns for these two kinds of deposits, the
information afforded by their increase or decrease
would be much more valuable.”
This point shows the necessity of considering not only the proportion
of loans to deposits but of specie to loans. On this point Mr. Burton
says:
“A continuous decrease of specie attended by an
increase in outstanding discounts is always a danger
signal. The gap between the two may widen for months,
and even for years, and may fluctuate from time to
time, but a sudden change of large proportions, or
a steady decrease of the percentage of specie is an
unfailing indication of danger. The reason for this
is not hard to discover. The quantity of metallic
money in a country shows what part of its capital is
available as money for the payment of its obligations
to foreign countries, the final test of availability.
For this last named purpose credit money cannot be
used, but only money having intrinsic value--money
of the Mercantile Republic, as it is called by Adam
Smith.”
The conclusion reached therefore, is that an increase in loans and
discounts with no corresponding increase in cash or with an actual
decrease in cash, reflects a bad state of affairs, even when the
advance in loans and discounts appears to be fully offset by deposits.
There is one feature which should not be overlooked. The very worst
state of affairs may be shown in the bank statement during a period of
great commercial activity and inflation in all lines. The reverse is
also true. In 1894, following the panic of 1893, the percentage of
loans to deposits fell to 80% and the percentage of specie to loans
rose to 30%; but no bull market occurred. This was due to stagnation in
all lines of business, a period of timidity and conservatism. In 1895,
there were signs of a great improvement and the stock market started
upward. This improvement, however, proved illusory and premature. Loans
rose quickly to 95% of deposits and specie fell below 15% of loans.
Then followed, in 1896, the new record of low prices.
In studying the bank statement for its effects on speculative prices,
surplus reserves will frequently suggest danger or safety. If surplus
reserves dwindle too near the vanishing point, the possibility of
necessary retiring of call loans is apparent. (See “Bank Statement,”
page 125).
It is possible to gain valuable knowledge by a careful examination of
the bank statement. The points made above are, of course, only of a
simple and elemental character. We may go on with our examination as
far as we like and scrutinize not only totals, but the position of
individual banks. Also, in order to gain a comprehensive perspective,
it will be expedient to examine, not only the barometer of the New York
situation, but the condition of interior banks. However, it is a pretty
good idea to begin with the A, B, C’s.
High rates for call money and the calling of loans are responsible for
many sharp market movements. A large class of speculators figure that
when dividend returns are high and call money cheap and plentiful, they
have a tangible influence working in their favor while they are long
of stocks. If rates for call money are 2% and a stock returns 6% there
is, eliminating speculation, an advantage of 4% per annum in favor of
the marginal speculator. This advantage is not so great in carrying
stocks on time loans, as rates for fixed periods are materially higher.
There is always danger of a flurry in call money, however, and in
the event of a wholesale calling of loans there arises the necessity
of selling stocks, and a decline occurs. There is also present the
element of manipulation in this quarter, and it cannot be gainsaid that
many instances have occurred where funds have been suddenly withdrawn
for the purpose of “shaking out” an undesirable following or of
accumulating securities to advantage; and on the other hand, call money
has frequently been made cheap in order to encourage purchases.
There are two periods of the year when the stock market is affected
by disbursements of money in the form of interest and dividends. The
two dates at which heavy disbursements occur, are January 1st and
July 1st. It is a popular belief that just prior to each of these
dates, money will grow “tight” because of the necessary provisions
made by banks and other corporations to meet such payments. Following
the actual distribution of funds, it is the theory that a part of
this money will seek reinvestment in bonds and shares. A great many
speculators argue that this would naturally produce stringency, the
possible calling of loans, and consequently lower security prices in
the latter half of December and June and an advance early in January
and July. While this reasoning looks sound enough on its face, it is
not at all dependable. It is certain that everything is discounted in
advance of actual events in speculative circles, and the more widely
such theories as the one mentioned are disseminated, the more dangerous
and inoperative they become. Instances are not lacking in recent
years, where the technical situation growing out of this reasoning,
has not only nullified the theoretical action, but has resulted in
actual reversal, i.e.: an advance just preceding disbursements and a
decline at the time the distributed funds were presumably returning to
investment channels. Numerous shrewd people, anticipating an advance
in January and July, have attempted to take time by the fore-lock by
effecting purchases in December and June. Their buying, being of a
competitive character, not only carries prices upward prematurely, but
creates a weak speculative long interest, subject to disappointment if
funds do not reappear in the volume expected, or susceptible to attack
by great manipulators.
There is another objection to this theory of periodicity. If the
market is dull and stagnant, with little public interest, it behooves
the large interests which have stocks for sale to bid up prices and
create activity prior to the heavy distributions of funds. They may
accomplish two things by this process. They make not only a higher
level of prices at which to sell their wares, but create what is of
even greater importance, an appearance of activity, prosperity and a
newspaper market. It is strangely illogical, but unquestionably true,
that people who would flatly refuse to enter a market at a low level of
prices will rush in to buy ten points higher if the factors of bustle
and excitement are present. Both the doctrine of common-sense and the
calculus of probabilities would establish the fact that each advance
brings us nearer the top, and each decline brings us nearer the bottom;
but few men can train themselves away from the idea that an upturn
already established does not indicate higher prices and vice versa. It
is a sort of enthusiasm which a minority understand, however, and make
good use of. The psychological effect of mere excitement is one of the
explanations of the incontrovertible fact that the public usually buys
at high prices and sells at low prices.
The acceptance of certain periods or seasons as a guide to either
purchases or sales of stocks is, in the last analysis, merely a form
of chart-playing. It is natural to evade a studious examination
of the general business and monetary situation and to resort to a
simple, albeit a superficial diagnosis, which, being insufficient and
incomplete, is dangerous. It is suggested that while the double effects
of contraction prior to distribution should be understood and examined,
the only safe method is to go behind these temporary and periodical
changes and study the whole basic structure comprehensively. We may
find that money is in demand for the purpose of propping and sustaining
an unsound business condition, and that it will in all probability
fail to return in volume to the security markets. This occurred in
January, 1907, and the believers in a “January rise,” were badly
disappointed. Interest rates on money must also be given consideration.
If the commercial world is striving to secure funds at a higher rate
of interest than is offered on shares, money, or a good portion of it,
will go where interest returns are greatest. And in this regard it
may be said, that merely local interest rates are not always a good
indication of money affairs in the business world. Not long ago, the
writer, being suspicious of the claims of plentiful money and low rates
in New York, investigated the matter through Western bankers and found
that prime paper was being offered west of the Missouri River at much
higher rates. This was made particularly significant by the fact that
previously the borrowers had always been able to supply their needs at
home, and that the loans, being offered through brokers, really cost
about ½% more than was apparent on their face.
It is frequently interesting and instructive to examine the character
of collateral behind loans, and find out how large a percentage of this
collateral consists of stocks and like securities. Our stock market
might appear to be in a sold out condition, when, in reality, a very
bad technical condition obtained. The purely marginal speculative
account in New York City, or other important centers, is carried on
under certain flexible rules or customs as to the amount of money
loaned on certificates; but in cases where securities have been widely
purchased for cash by small holders, and, in the event of general
tightness in money or depression in business, made the basis of loans
in country banks, but we have, in fact, a very weak _marginal_ public
account. The home banker will loan more liberally to his townsmen and
will scrutinize the movements of prices or the stages of the market
less closely than the city banker, and the certificates owned by small
holders and deposited as collateral may, in the aggregate, represent
an enormous line of shares. It would be quibbling to say that this
situation represented anything less serious than a weakly margined
public line. If the market declined materially, the bankers would be
forced, in self-protection, to call for more collateral, and the result
would depend, as in all other cases, on the ability of the individual
holder to take care of himself. Such a condition existed in U. S.
Steel stocks in the depression of 1903, and was pointed out at the
time by the writer. The knowledge obtained was based barometrically on
information obtained from a number of bankers in different localities.
While interest rates for both time and call money are frequently
fictitious, or of a temporary and artificial nature, and no set rules
can be laid down as to certain conditions in money and their immediate
effects upon security values, it is not difficult to gain a general
idea of underlying conditions. We have always at hand statistics which
will reflect faithfully the fundamental basis of the entire world
structure. But in this important division, as in most other branches of
speculation, we often find that what is really important is absolutely
ignored, while matters of little moment are harped upon, or even made
the basis of operations. Thus, every habitue of brokerage offices
eagerly watches the bank statement or the rates on call money, and
knows nothing about the expansion of credits, even when such expansion
has reached a point that would make a crisis appear inevitable. No
better proof of this can be offered than the fact that our heaviest
business and greatest inflation, have frequently gone merrily forward
for a year or more under suicidal conditions. These conditions have
sometimes been so obvious, so forcible, that it would appear impossible
to view them with equanimity. In a majority of cases they were probably
not viewed at all, and the thoughtful men who pointed out the danger
have been called calamity howlers or pessimists. There is one great
check to education in this direction: great financiers who are most
conversant with actual conditions, seldom find it expedient to point
out the facts. Sometimes they, themselves, wish to dispose of their
holdings because of the obvious peril ahead and this process would not
be facilitated by gloomy predictions. On the other hand, it is too
often the case that these same gentlemen, finding it to their great
advantage to disperse sunshine until their goods are sold, point
assiduously to the excellent business of the present, and neglect
to touch on the irrepressible future, which, after all, is the most
important question to the investor or speculator.
V
Political Influences, Crops, Etc.
The possibility of legislation adverse to corporations is always
present as a market factor, and at times severe declines have been
recorded through such action. It is not always the case that such
legislation is truly a bear factor, although it is fashionable to so
interpret anything in the nature of legislative interference with
corporate affairs. It is the writer’s opinion that a great deal of
misunderstanding has recently arisen in regard to the attitude of
certain party leaders toward the heads of great railroad corporations.
The opinion has been widely fostered by opposing politicians and others
that the credit of railroad corporations was being badly impaired, and
the interests of stockholders jeopardized because investigations were
ordered as to the methods of individuals or directorates.
It does not appear that any reasonable man could, as the stockholder of
a corporation, or as a private citizen, object to having dishonest or
sharp practices on the part of the active management of the property in
question exposed and prevented. Where it is shown that an individual,
in his capacity as the head of a business, has employed his office as a
means of juggling stocks or reaping enormous personal gains, it cannot
but be to the interest of stockholders to have such practices stopped.
If the means at issue are honest and legitimate, the benefits reaped
should go to the stockholders. It is impossible to reconcile any other
plan with equity and common honesty. Let us look at the matter without
the mystery that obscures the affairs of a great corporation.
Suppose a member of a certain firm, its manager, finding the firm
in need of funds, secures money at a high rate, and at great profit
to himself--is that right? Or is it the manager’s business to work
entirely in the interest of the partners he represents? Is it possible
for him to legitimately acquire personal profit of any kind in
administering the affairs of the firm? It is not sufficient to point
out that the manager’s action in securing funds redounded to the great
benefit of the business concern, or that his capability and shrewdness
were reflected in enormous partnership profits. His associates in
business are entitled to all, not a portion, of the gains secured in
the management of its affairs.
It is submitted that much of our recent legislation which is popularly
supposed to have injured stock values has, in reality, aimed to protect
the small holder and throttle the unscrupulous men who, while actually
in their employ, were milking their business of millions. Legislation
which effects publicity and simplicity in the affairs of corporations
is an unmixed benefit to the small investors.
It is almost invariably the case that when a great decline in stock
prices occurs, the set-back is popularly attributed to some factor
which, in reality, had little to do with the reversal. In the decline
of 1907, thousands of people attributed the inability of railroads
to borrow money at low rates of interest almost entirely to hostile
legislation. Apparently these rapid-fire thinkers did not know or
realize that interest rates had risen the world over, that there was
not a free money market in the world, and that money, instead of being
withheld from 4% issues, was fully employed in other lines. Such,
however, was the case; British Consols, French Rentes,--all the choice
securities of civilized countries had kept pace with the declines in
our own bonds and stocks; but these facts seem to be unappreciated.
It is true that adverse legislation sometimes seriously impairs the
value of a security. A public utilities company, for example, which
is forced to reduce its selling rate, is unquestionably injured
from an investment point of view. Such legislation, however, may be
weighed correctly by a little calm consideration, and it may be said
that action of this nature is usually for the purpose of correcting
abuses, rather than as a revengeful and confiscatory attack on vested
interests. Measures which prevent a fair return on capital will perish
of their own iniquity. So far as measures which are formed to prevent
extortion are concerned, it is impossible to criticize them.
In order to correctly weigh the effects of legislative measures on
security values and prices, we must therefore examine fairly what
the legislation seeks to accomplish, taking care not to allow a
contemporaneous price movement which may be due to other causes, to act
as a verification of a false view. This error occurs very frequently;
in fact, one of the most remarkable things about speculation is that
the true causes of great movements are fully appreciated by the
majority _only in retrospect_.
The probable market effect of legislative and political affairs can be
correctly gauged only by examining the nature and importance of the
issue in question. This is true not only of state and municipal action,
but in regard to presidential elections. There is a popular idea
that it is dangerous to buy stocks on the eve of a new presidential
campaign, but there is not much in history to uphold the view. True, in
a majority of cases, a decline has preceded such a contest, but there
have been frequent reversals of this action, and we have had too few
elections to attempt any chart-playing on this influence. Such a guide
would be empirical.
The issues involved in a presidential contest, however, may sometimes
influence prices. Here again a careful examination of facts and
probabilities will generally uncover the truth. If the nominee of one
party stands on a dangerous platform and the outcome of the contest is
in doubt, we may well dispose of shares if for no better reason than
that the element of danger is present. Danger, whether or not it is
finally realized, is a bear factor, just as safety is a bull factor.
Tariff agitation should be accorded careful consideration by the
speculator. This is particularly true as regards the effect on
industrial corporations. A reduction of the present tariff on Iron and
Steel, for instance, would materially lower, if not destroy, the value
of many of the common stocks of steel manufacturing corporations. A
very clear and comprehensive work on this subject is mentioned in the
bibliography on page 183.
No cut and dried rules or suggestions can be offered as to the
effects of political or legislative issues on prices. Each point
must be scrutinized as it arises, and judgment formed thereon.
Sympathetic movements will sometimes occur because of apprehension or
misunderstanding, but such effects will be short-lived.
_Crops and Crop Failures._
The question of crop failures is of great importance. It is not
difficult to form a fairly correct idea as to the ultimate yield. The
estimates of the Government sometimes go wide of the mark, but it
must be remembered that they are _estimates_ and nothing more, and
that conditions may change somewhat after the figures are compiled.
The speculator is frequently confused by the conflicting opinions
of private experts. It is probably safer to disregard the various
authorities and pin one’s faith to the computations of the bureau at
Washington. These official documents have been criticized at times,
and no doubt the criticism has been warranted, but they form our most
dependable source of information and will improve as time rolls on.
A crop failure, or a short crop, invariably brings forth much
fallacious vaporing from the rooters of Wall Street. They are as bad in
their efforts to obscure the truth as are the crop-killers with their
fabrications. A crop failure is a serious thing and must be faced as
such. The contention which is always heard in lean seasons, that the
evil has been counter-acted because of the large reserves of Wheat,
Corn or Cotton in farmers’ hands is ridiculous. Farm reserves are
wealth. They have already found their place in the business structure.
In many cases the money they represent has already been spent in the
form of credits. Nor do high prices for cereals or cotton overcome the
evils of short production. Small crops mean decreased employment for
laborers; a diminution of per capita purchasing power, and increased
cost of living. They also mean smaller tonnage for the railroads, and
consequently decreased earnings.
And in examining crop prospects, we should consider the fact that each
year’s normal crop should be larger than the one preceding it. This is
distinctly shown by tracing production back for a term of years.
There will, of course, be fluctuations in this gradual increase, but
the tendency is certain. We may also consider that as railroads are
constantly extending their lines and increasing their facilities, it
follows that increased production in the commodities they transport is
necessary to their well being.
And short crops the world over in the same year have the same elements
of economic evil. The purchasing power of the world is reduced, and
even if we ourselves make fair crops and export them at high prices,
the world’s poverty is felt in lack of demand for other exportable
surplus. The civilized world is too closely knit together in its
affairs to permit of the entire localization of the effects of a
serious property loss.
A lean crop year can probably do more to temporarily injure the
actual _value_ of railroad shares than can any other single influence
bearing on prices. Tonnage is affected both ways, so is passenger
traffic. There is less grain or cotton to haul to the markets, and, as
purchasing power has been reduced in the affected localities, there is
less freight to haul back to the producers. In the last analysis, the
products of a community represent to a great extent the mere exchange
of these products for other luxuries and necessities, and the effect of
decreased production is a two-edged sword, so far as the transporting
companies are concerned.
_Accidents._
The effect of accidents on stock prices has been fully discussed
in a former work, and the contention offered that accidents could
no more be provided against, or considered, in the investment or
speculative world than in any other walk of life. It is also thought
that accidents are more frequently the _excuse_ for movements than
the _cause_ of them. If a market is in a bad technical or general
condition, the slightest adverse happening may create panic; while
if the foundation is sound, even a great calamity, such as the San
Francisco earthquake, will cause only a temporary halt. The man who
speculates correctly has little to fear from accidents.
In the following section of this work, the writer
has undertaken to touch on such features as appear
of most interest and benefit to the speculator or
investor. Some of the matter presented, such as the
question of dividend dates, will appear to many
readers so simple as to be unnecessary, but it is
true, nevertheless, that many very elementary facts
are misunderstood or unappreciated by a large class
of public participators.