''':

;n!i'."r';-'

How

to Save

Money

How

to Save Money
The Care of Money Plain Facts About Every
Kind of Investment An Expose of the
Prevalent Fraudulent and Get-Rich-

Quick Schemes
Valuable and
Authentic Information for
all Moderate Money-Savers
and Small Investors

By

Nathaniel C. Fowler,

Jr.

AUTHOR OF "STARTING IN LIFE," "PRACTICAL SALESMANSHIP," ETC.

CHICAGO
C.

McClurg &
1912

Co.

Copjright

A. C. McQurg

&

Co.

1912

Published February, 1912

Entered at Stationers' Hall,

London, Eingland.

aA305732

PREFACE

THE

writer of this book feels that

able,

although

it

may not

announce positively that he

is

directly or indirectly, with

it is

advis-

be necessary, to

not connected, either

any form of

invest-

ment, or with any bank or brokerage establishment, or with any institution having anything to

do with the

sale of stocks, bonds, or securities of

any kind. He has no axe to grind at the reader's

expense, no scheme to further, and no investment
to recommend.

He

is

telling the truth, the whole truth, within

the field of his light.

He

attempts to get at rock-

bottom and to reach the sub-cellar of financial fact.

He is aware that on all questions, and especially
those of investment, opinions differ, and that most

honest

men

cross swords

when they attempt

to

appraise, value, and recommend.

What

one reliable

of investment,

may

man

considers a good form

not appeal to the judgment of

another equally honest and cautious.

He who

been successful in investing along a certain

will naturally

has
line

favor that form of investment, while

who thinks that he has been bitten, condemns a good thing, even though his injury may
[v]
another,

Preface
not have been caused by the unreliability of the
investment

No

one

somewhat

itself.
is

completely fair, and every one

is

Personal experience, natural

biassed.

or acquired conceit, pig-headedness or stubbornness,

count mightily in framing opinion and in

forming judgment.
All kinds of investments have some intrinsic
value, save those which are highly fraudulent, but

some give the maximum of security, while others

it.
Some are sound and

have the minimum of

solid, while others

The saver and

mind

this

maximum
the

great

is

that

fundamental point,

of interest

minimum

of interest

are purely speculative.

investor should bear always in

is

the

usually accompanied with

of security, and that the

likely to be close to the

minimum

maximum

of

safety.

Good security seldom gives large profits.

The writer has strenuously avoided the exercise
of mere personal opinion, and has made every
effort to

keep far away from individual bias.

He

has used every known precaution, and he hopes

that he has succeeded.

To

the

little

he knows, he has added the

much

of what he knows about what others know, and

what he has written does not in any case represent
He has dealt in
his own unsupported opinion.

[vi]

Preface
majorities, and has been a strict adherent to the

great law of averages, that everything that he

has said

may have

The book

is

the strength of the composite.

not intended for large investors, or

for professional money-changers, or for specula-

addressed,

tors.

It

women

of every age

is

primarily,

who are

to

men and

financially able to

save moderately and systematically, and

who wish

to learn, therefore, of every form of investment,

that they

imum

may

place their

of safety.

fvu]

money with

the

max-

CONTENTS
CHAPTER
I
II

.The Mateeiamstic

The Provident and

....
Improvi-

19

dent

Means

III

Living Beyond Our

IV

Fixed Expenses
How Much to Save

...

Extravagance
Petty Extravagances

...

V
VI
VII
VIII

IX

X
XI
XII
XIII

Dress

Taking Advice
Loaning to Friends
Taking Speculative Chances

...

....

The Savings Bank

The United States Government Bond

Bank Stock

XVI The Investment Value

Stocks

29
37
39
53
68
79
83
90
96
99
113

XrV The State, Municipal, and

Town Bond

XV

PAGE
13

118
127

of
131

[ix]

Contents
CHAPTER

XVII
XVIII

XIX

XX
XXI
XXII
XXIII

XXIV

XXV
XXVI
XXVII
XXVIII

XXIX

XXX
XXXI
XXXII
XXXIII

XXXIV

XXXV

PAGE
137
146
.
155
168
183
The Chattel Mortgage
185
The Fake Investment
.
Owning a Home
210
224
Life Insurance
238
Fire Insurance
242
Accident Insurance
244
The Annuity
247
Backing Business
252
.
Keeping a Bank Account
259
The Cooperative Bank
262
The Home Bank
264
Keeping Accounts
c
269
Treating
272
The Safe Deposit Box
What Some Terms Stand For 274
285
Index

Speculating ix Stocks
Buying Stocks on Margin
Industrial Stock
The Real Estate Mortgage
.

....
.

....
.

t^]

How

to Save

Money

How To Save Money

CHAPTER I
THE MATERIALISTIC

THE
feel

and hope
may honestly

critical readers of this book,

there will be

many

of them,

that I have leaned altogether too

heavily

toward the purely materialistic at a sacrifice of

the mental and spiritual and that which counts

more in the up-lifting and betterment of

Money, together with those things
money stands, is largely located within
ical or materialistic field; for money,
is

humanity.
for which
the phys-

by

itself,

certainly of neither ethical, mental, nor spiritual

composition, and

is,

as

much

as anything else,

representative of the material.

I do not apologize, however, for the policy of
this book.

The

material plays by no means a

secondary part on the stage of everyday

God found it necessary

spiritual man to build

in creating the

life.

If

mental and

material headquarters for

the housing of the mind and the soul, we have no

right to

ignore

either

of

the

departments of

Divine construction.
It

is

unnecessary to make a comparison between

[13]

How

Save Money

to

the higher things and the lower things in which

One without

the higher things are kept.

would not present,

whole.

one

in

this

world,

the other

completed

Therefore, as both are found together,

may

be considered as essential to

human

life

as the other.

This world, preeminently material

struction, should be considered
It

in

its

con-

and appreciated.

for the time being, the physical dwelling-

is,

The Almighty placed

place of the spiritual man.

us here for a purpose, and would not have given

us physical land, and food, and other things as
material,

made

if

they were not to be used by us and

to serve their ordained purposes.

There

will

be neither money nor business in

millennial days, for all things

worth having

But for

then be used, not abused.

will

the present,

and probably for many generations to come, money

will play a prominent part, and the making and
saving of money will be necessary for present

and future protection.

ignore money and money-saving, because

existence

To
they

may

be purely materialistic, so long as they

are necessary to

human

existence,

is

foolish

and

criminally wrong.
It

tain

is

impossible properly to develop and main-

the

housing.

better

part

of

man

Food, a roof, and

[14]

without

fire will

careful

be essential

The
so long as

And

Materialistic

we must eat and keep dry and warm.

which some think are man's

these things,

natural heritage, at the present time are procur-

by the expenditure of money.

Despise money if you will, and certainly

able only

deserves to be despised, for, in

itself,

it

is

it

the

cause of nearly every crime; but do not forsake

money which

is

profitably used.

obtained honestly and

may

be

Unless we return to Nature, as,

perhaps. Nature intended, we will have to get

money or

starve to death.

vessel, freighted

with the necessities of

and many of those things which appeal

life

to our

higher nature, was stranded on an unknown island.

storm had made her unseaworthy, but her hull

held together long enough for her cargo to be

brought ashore.

Everything was saved, including

cases of beautiful paintings

art,

and books that

live

and

and other works of

talk.

The captain

was a man of education, but he never could have

handled his

vessel, if

he had not kept his feet on

deck while he looked into the clouds.

The

disaster

Did he order the works of

art to be first landed ? Certainly not. They came
last, and before them, lumber, and stoves, and food.
Under his direction houses were built, with roofs
was no fault of

that did not leak.

his.

Stoves were set up, beds made,

and the strongest building of

[15]

all

contained the

How

to

Save Money

A well was dug, everything necessary for the physical body was arranged for.
food supplies.

Then, and not until then, the works of art were

taken and placed upon the walls, to add a touch
of beauty to the bareness of the material.

house, with a roof that did not leak, came

The

physical

effort

The

man was

The
first.

attended to before any

was made to please the eye or

aesthetic taste.

better things were ignored until there was a

material place to keep them

in.

I told this story in a lecture once, and a

man

with a long coat, a high collar, and a white neck-

He

took highly

respectable exceptions to what I had

said, for this

tie

arose from the

kind of
action.

man

He

is

audience.

never strenuous in thought or

claimed that he would rather have the

He enlarged upon the

and reduced the material. 'When he had
finished, I remarked that the man who loved the
landscape more than the land found it necessary
to stand on somebody else's land that he might
see everybody's landscape, and this sort of a man
landscape than the land.
ethical

is

dishonest, because he

and beautiful things of

is

willing to view the free

life

at the expense of the

hard-working man who bought the land for the

visionist to stand upon.

I wanted to use the language of the street, and

say that this landscape man was a " dead-beat,"

[16]

The
who was

Materialistic

willing to

" beat " his

way

to a free

landscape.

So long as we live largely by the expenditure

of money, either we earn that money ourselves, or
we are paupers. Many a man, who keeps his eyes
turned continuously toward the sky, has no respect
for the workers who are laboring to keep him on
earth.
It is dishonest not to support ourselves
and provide for the future, unless we are physically and mentally unable to do so.
I am not asking any man to accumulate large
sums of money, for few high-grade men ever do.
But I am attempting to show that money-earning

and money-saving are positively

essential

under

present conditions, and that the refusal to earn

money or

to save money,

when

it

can be done,

criminally dishonest, as dishonest as

it is

is

to steal

your neighbor's house or your neighbor's bank.

If you are able to earn your living, and are
able to save money, and do not, you are a voluntary pauper, unworthy of the respect of man.

When you refuse to do these things, you simply

and deliberately say to the world that you are
willing to live

by the sweat of

by the work of

Look

others'

brows and

will, love

and rever-

others' hands.

into the sky,

if

you

ence art, think more of the purity of real beauty

than you do of the purely material, but

[17 1

first

Hov:

to

Save Money

build a house with a roof that does not leak.

If

yoa do not, the rain will wash over jour canvases,

and the smi will warp your hi^er thou^ts.
The material cannot be built upon the spiritual,
but the spiritual lives and thrives upon the material

Never forget the need

of a house with a roof

that does not leak.

[18]

The Provident and Improvident

CHAPTER II
THE PROVIDENT AND IMPROVIDENT

BOTH the spendthrift and the miser are plain,

simple, and ordinary fools of the most con-

There

ventional sort.

is

not even the

flicker of

spark of originality, progress, or of anything

which stands for anything worth while,

everyday

They do not

folly.

deserve,

else

in their

and they

never receive, the respect of anybody, not even

of their

The

own

kind.

spendthrift,

the whirl of the world,

in

never meets a friend; and the miser, in his seclusion,

too unsocial even to see the reflection of

is

himself.

The

spendthrift over-pays for everything which

he receives.

It

is

impossible for him to obtain

equitable return for the

money he

sows, but never harvests.

field

He

distributes.

works harder

of his folly than do the toilers of the

The miser

is

storehouse

entrances and without an exit.

not a contributor.

He and

He

in the
soil.

hundred

with

He

a receiver,

is

the spendthrift are

menaces to society, and a court of sensible equity

and common

justice,

if

it

could be established,

would sentence both of them to hard and active

[19]

How
labor

to

Save Money

to doing something which would be a con-

tribution to general humanity.

It has been said (but, of course, the statement

cannot be substantiated by statistical fact) that

more than half of the great middle

ple,

class of peo-

especially Americans, are improvident, that

they spend

all

that they earn, that half of them

attempt to put out more than they take

in,

and

that they live close to their incomes, or ahead of

them, flush to-day and cramped to-morrow.

Whether or not

the proportion given

I will not attempt to say, but that

siderable

dimension

is

it is

would appear to

as large,

of con-

be

self-

evident.

Practically every physician will admit that he

loses
bills,

from twenty-five to forty per cent of his

from the middle class of people,

especially

and that the lower grade of patients are likely to

be of more financial profit to him than are those

who

fly regularly for shelter under the protecting

wing of conventional respectability.
The retail grocer, and others who cater to fam-

and the credit-giving tailor, especially,

are obliged to use the utmost caution if they would
ily trade,

avoid continuous

The

loss.

establishment of commercial agencies, credit

and trade-protecting orders of every

kind, furnish prima facie evidence that a heavy
rsoi
associations,

The Provident and Improvident

proportion of the people at large are both dishonest and improvident.

The

reader

may

that I

feel

am

pessimistic,

and

am

looking upon the dark side of things.

The pages

of this book are intended to be printed

that I

mirrors of fact, reflecting actualities, true state-

ments of conditions that are, not conditions as we

would

like to

I would suggest that

have them.

the doubter interview the retail merchant, and

others, including the house-renters

and the

sellers

of those things which appeal to the alleged better

He may

class of society.

leaned rather toward

then

that I have

feel

the optimistic than to the

pessimistic view.

Why

do people

cially those with

live

beyond

incomes

their means, espe-

sufficient to

provide

of the necessities and most of the comforts of

There

At

is

not,

best, there

plification

and cannot
is

be,

all

life ?

any good reason.

but a feeble excuse,

the exem-

of that false, and yet common, idea

possessed even by those

who have some brains

fair quality, that, because the world

is

of

popularly

supposed to judge by appearances, and to reckon

us by the outward show we make of ourselves, and
to honor the superficial side of
fied in

life,

we are

justi-

appearing to be what we are not at an

expense which we have no right to allow ourselves

to assume.

[211

How

to

Save Money

This false conception of things, coupled with

the bad judgment accompanying

it,

largely

is

responsible for the present deplorable condition

of society, although, of course, the real source
lies in
is

the lack of personal honor, a quality which

far from becoming universal.

As

a matter of fact this reason, or excuse, for

living

out

up

to our incomes, or

or

tangible

locatable

beyond them,
foundation,

spendthrift, or the extravagant man,

around

is

with-

for

the

an

all-

is

and a criminal before the bar of

and, further, he receives no real recog-

loser

humanity

from those before whom he makes his display, no, not even from his kind.
The sinner, whether his wrong-doing be extrav-

nition

agance, or something not quite so bad, or worse,

is

a product of vulgarity and corruption, a back-

a gossiper, and a busy-body, who, from some

normal or abnormal reason, has not what may be
considered sense enough to observe in others the

biter,

very sin he, himself, commits.

Therefore, the

spendthrift, or his extravagant associate, fails to

obtain what he desires,

position in society, a

recognition of what he wants people to think he

is.

The only

be so called,

benefit that accrues to him, if

is

may

that he enjoys artificially some of

the luxuries which his sensible neighbor

willing to

it

is

have unless he can afford them.

[22]

not

He

The Provident and Improvident

does not, as a spendthrift, or as a representative
of extravagant living, obtain a single true friend,

and he never

The

any

receives

friend

who

real admiration.

loves us because he

to help us spend our

is

allowed

by the
who admires us

money, or

expenditure of that money, or

benefits

because we have money, does not represent, in

even the shadow of the semblance of the

fact,

stuff friendship

made

is

Friends cannot be

of.

purchased by money, and dealers

friendship

in

refuse to be money-changers.

A show

anybody any
True friendship occurs
a reciprocating way, and depends wholly
of extravagance never did

good, and never

only in

will.

The extravagant man

upon genuine character.

absolutely

receives

nothing, except the

ignoble

satisfaction which the exercise of over-expenditure

gives to one

who

will not, or does not, think.

The improvident man

He

rower.

lives

is

usually a chronic bor-

upon what he

what he can get without earning

may

not intend to make good.

out an

effort,

he thinks

he

little

his conscience

is

likely to

about
is

it.

do

The

earns,
it.

and upon

He may

or

If he can, withso.

little

If he cannot,

he has

left

of

kept in cold storage and melts

in the sunlight.

large

proportion

refuse to save

of

improvident

people

when they have the opportunity,

[23]

How
They

to

Save Money

beyond their means. They would not

any part of the present for the protection of the future, and yet they expect the provident to help them when disaster comes.
live

sacrifice

Let me

by a concrete example:

illustrate

young men

of equal ability, but not

Two

of equal

character, start to travel the great highway of

For a dozen years

life.

their incomes are the

same, and there should be no material difference

in their expenses.

the luxuries of

he

is

life,

The

dollarless.

He

but not mean.

One allows himself to enjoy

and at the end of the period
other has been provident,

has lived below his income, and

The improvident

has accumulated some money.

man, who has

ries of life,

made

and enjoyed the luxuprovident

man, who has
expects the
lived better

sacrifices, to

share his savings with him.

In

who has spent

his

other words, the spendthrift

eaten

money,

who has saved

He

it

and drunk

it,

asks

the

man

to give part of his savings to him.

has eaten the whole of his pie, and demands a

part of the other fellow's

pie.

This condition

is

too prevalent to be a novelty.

It

is

self-evident that

and spend

it

we cannot have money

at the same time.

The ever-ready

spender does not accumulate, while the systematic

saver protects himself against the future.

There would appear to be no reason why the

[24]

The Provident and Improvident

provident

man

should share his hard-earned sav-

who could and

same position in which the
provident man is, if he had exercised the same
care and made the same sacrifices.
The sinner cannot escape punishment, and
ings with the improvident man,

would have been

withholding
sufficient

in the

deserved penalties,

unless

counteracting repentance,

is

there be

neither fair

nor equitable.

The improvident man

him

suffer.

have

it.

He

Better that he suffer ten

fice

Let him

times

man make an undue

than that the careful

for the benefit of one

Let

deserves to suffer.

has earned a penalty.

over
sacri-

who threw away what he

had.
I

know that

am making strong statements,

my readers may misunderstand

and that some of

me, and, perhaps, I

am

giving them some oppor-

tunity to feel that I do not look upon charity as

the greatest virtue of all virtues.

Let me, right

here, assure these readers that I think I have

of

stands

Without

for.

represents, this
oasis,

and across
Charity

water.

there

is

an

and of what charity

and the love it
world would be a desert without

appreciation

charity,

it
is

charity,

would flow no stream of living

warp and woof of all

the very

worth having.

But

charity, distributed

promiscuously, and given as a reward for crime,

[25]

How
is
it

to

Save Money

an abetter of crime, and does harm where

intended to do good.
There are times when we should help the

really

improvident man, on account of the innocent mem-

who may be

bers of his family,

To

him

aid

free

from

as a part of the suffering family

often justifiable, but to help him, alone,

when

is

his

due to his voluntary acts, is

and is, at best, of no stronger
than the distilled essence of diluted and senti-

present condition

not charity at
stuff

fault.

is

all,

mental philanthropy.

The man who

is

financially

embarrassed because

of extravagance, and because he would not save

when he could save, does not deserve financial

assistance when the inevitable crash comes, and
any attempt on the part of the provident man to
relieve him financially, unless such relief benefits
an innocent family,

is

not only foolish, but often

criminally wrong.

Do

not misunderstand me.

to the
table,

man who

from
but

control,

is

am

not referring

suffering because of the inevi-

conditions which were beyond his

to the spendthrift, the voluntarily

who has lived up to his income,

when he had more than sufficient to
take care of him, and who is now suffering from
his own voluntary misdeeds. Such a man deserves
no financial help until he has redeemed himself by
improvident, he

or beyond

it,

[26]

The Provident and Improvident

the sweat of his brow and the strain of his muscle.

He

is not an object of charity or of philanthropy,

and he who loves to help others had better turn

the tide of his goodness into other channels, that

he

may

aid the millions of those

who are thrown

overboard, and who did not sink voluntarily.

There are enough good men, temporarily or

permanently
rial

in disaster, to furnish all the

mate-

philanthropists need for the exercise of their

generosity.

To

help the deserving

undeserving

is

wrong;

is

To

right.

aid the

yes, doubly wrong, because

the undeserving deserves no help, and the helping

of the undeserving robs the deserving of his due.

Giving more than opportunity to those who are

too lazy to grasp

extravagance, and

it,

is

to encourage carelessness,

sin.

Those who do their best are worthy of all praise

and aid, but those who will not do their best
should suffer the self-imposed penalty.

You

have

no right to do for another what he did not do for

himself, when he comes to you and wants you to
do for him what he could have done for himself

and would not

I have

do.

no pity for the man who won't.

every sympathy for the

He who

tries

man who

to do his best

matter what the result

may

[27]

have

will.
is

a success, no

be; but he who does

How

to

Save Money

not try to do his best has no right to expect the

man who

did his best to share with him the prod-

uct of his labor, judgment, and sacrifice.

Help those who help themselves, or who try to

help themselves, and refuse to aid those who with
closed eyes have walked in the light, and who with
open ears have refused to hear the warning thunders of danger.

[28]

Living Beyond Our Means

CHAPTER III
LIVING BEYOND OUR MEANS

DO

not think that I

am

far

away from the

truth when I say that experience and observa-

tion

make me

believe that

about seventy-five per

cent of city dwellers and that about twenty per

cent of the inhabitants of country towns spend all

that they earn, and that at least one-half of them

have lived or are living beyond their means.

Instead of conditions changing for the better,

they appear to be going the other way.

Prob-

ably more people are to-day living beyond their

means than there were yesterday, and there seems

to be

little

inclination on their part to practise

any sort of economy.

Not only do they spend

all

they earn, but they anticipate their incomes or

salaries, incurring indebtedness in
sibility of

It

is

advance of pos-

payment.

obvious that a family of small income,

and with legitimate necessary expenses, cannot

always do much better than break even, though it
practise the most stringent economy; but it is a
fact that the majority of people spend all that

they make, or

The

live

beyond

their incomes.

and most of those things

[29]

necessities of life,

How

Save Money

to

which are considered comforts, are not excessively

expensive.

Most

very much

less

of us can live comfortably on

money than

is

supposed to be

Foundation expenses

necessary for right living.

are small, over-head excesses are large, and most

of the latter contribute very little to

anything

worth while.
Getting behind

is

usually due to extravagance

or to an unwillingness to do without the unnecessary.

True, no sharp

can be drawn between the

line

and the

cost of comfort

cost of extravagance, for

what may appear to be an extravagance for one

person

may

be a seeming necessity for another.

But one who

cares,

and who honestly desires to

succeed, will not find

and

will

it

invariably

difficult to

recognize

discriminate,

the

difference

between the necessary and the unnecessary.

Fully one-half of the financial failures are due
to pure and simple extravagance in the
to expenditure of
entirely

money

removed from necessity.

who manages

his

home and

for personal pleasures

business

with

Many

a man,

anxious

care,

handles his personal expenses in the most extrav-

agant and foolish way.

Not only

are

home and personal expenses

the

cause of half of the business failures, but they are

in

many

cases the prime source of

[sol

home

troubles,

Living Beyond Our Means

leading to the breaking

up of

the

home and

cover-

ing nearly every form of family unpleasantness.

While money appears to be more a part of

than of home

business

the foundation

life,

of

economy, or of extravagance, or of sensible or

senseless expenditure,

one

first

is

begins to save

laid in the

money or

Here

home.

to do the reverse.

The economical-home man or woman

is

usually

economical in business.

Home

extravagance,

clothes, has

world

particularly

basis in a desire to

its

foolishly

calls

good

that

of

make what the

appearance,

to

decorate the outside without regard to the con-

In fact, I think that to

dition or the necessity.

this almost insane desire to

appearance

make a

so-called

good

due most of our extravagance in

is

dress, in furnishings, in decorations,

and

in the

purchase of things more for show than for utility

and comfort.
is

Indeed, the display of extravagance

always superficial.

We

wish to appear well

who we think
As a matter of fact

before our friends and neighbors,

would judge us

superficially.

any undue attempt on our part

beyond our means works

to dress or live

in a direction opposite

We are not judged as superwe think we are. Most of us, particularly if we are of the middle class, are pretty
fairly well sized-up by our friends and acquaintto our intentions.

ficially as

[31]

How
They

ances.

Save Money

to

know what our income is, or

it.
If we over-dress

either

can come pretty close to

ourselves, they despise us, even

though they may

be as guilty as we are.

we cannot afford to keep horses or autoand we do so, we lose the respect of

horse-keepers and automobilists, even though they
may have less right than we have to drive horses
If

mobiles,

or run motor-cars.

The shoddy man has no

is

those

who are shoddy.

It

show

all

impossible to understand that peculiar

is

human

trait in
*'

respect for his kind.

shoddy, he recognizes the quality in

If he

nature, which encourages one to

off," so to speak,

that one

is

among

" showing off."

It

those

who know

would seem that

by pretending to be what
who
know that we are not
we
what we pretend to be. For example, let us suppose that Mr. John Smith is Mr. John Jones's
nothing

is

to be gained

are not to those

employer, and that Mrs. Smith invites Mrs. Jones

to tea.

Mrs. Smith knows the

income; therefore, she

is

size of the

Jones

in a position to

judge

dressed properly and

whether or not her guest

is

within her means.

quite probable that the

It

is

wife of the employee will wear better and

more

expensive clothes than those worn by the employInstead of Mrs. Smith being imer's wife.

[32]

Living Beyond Our Means

pressed by

Mrs. Jones's clothing, she despises

woman

for living beyond the family income,

the

and

carries her disgust to her husband, to

the

detriment of Mr. John Jones.

May
more

I forget honesty for a

moment that

closely analyze pretence,

which

may

the top,

is

bottom, sides, and centre of the cause for living

beyond our means? Let me consider pretence, for

the time being, as a commodity with intrinsic
If

value.

it

be a commodity, and

intrinsic value, then it

as

it is

if

it

have

valuable only in so far

is

not recognized as pretence, but

is

consid-

ered as representative of fact.

If

one cares nothing for truth and honesty,

then he

may

use pretence to some advantage, pro-

mask it effectively, and

what it is not. This, howimpossible for any one to accomplish.

vided always that he can

can force
ever,

is

it

to appear

The pretender
run surely,

is

always the loser, in the long

in the short

blooded world

will

run usually.

The

cold-

weigh him correctly, sooner or

later.

There is absolutely nothing to be gained by

beyond one's means:
First, because it
prevents one from protecting oneself in case of
emergency; Secondly, because it is a precarious

living

habit and sets a bad example; Thirdly, because

it

necessitates

economy

In

[33]

some directions, which

How
may

be

Save Money

to

dangerous

and

health

to

comfort;

Fourthly, because, instead of giving the credit

and producing the impression

in the

results

opposite;

desired, it always

Fifthly, because

the forerunner of almost certain failure

it is

it

is

Sixthly,

Seventhly, because

positively dishonest;

action always injures

its

and never accomplishes any-

thing.

We

pre what we are, and we are taken usually

for what

we are, except for a transient period or

by people whose respect is worth less than nothing.
We have what others think we have, and any
attempt on our part to produce the impression of
possessing more than we really have, can give only

a boomerang result.

Living beyond one's means

but extremely

foolish.

Even

is

not only wrong,

the

most extrav-

agant and foolish have not a particle of respect

their own kind, and in their hearts they

for

admire those who have sense enough to

live

within

of the best places for the study of

human

their incomes.

One

nature, and for the weighing of values,

summer

resort, especially

at the

is

summer

at the
hotel,

not necessarily of the better grade, but of the

highest price.

dressed

Fully seven-eighths of the over-

men and women, and

of those

who come

in

automobiles, represent neither wealth nor social

[34]

Living Beyond Our Means

The

position.

probabilities are that the plainer

dressed people, even though they comprise but a

small per cent of the guests, collectively have a

dozen times more money and more than a dozen

times higher social standing.

am

aware, of course, that practically

all

of

the multi-millionaires, and all of their families,

are devotees to show and style and to the dis-

play of every form of foolish and financially

criminal extravagance.

The tendency

show on the part of our

wealthiest people is growing rapidly, because display offers opportunity for competition, and few
men would care for very large sums of money if
great wealth did not give them the chance to
vulgarly parade

for

it.

But we need not draw our

lesson from these

Although they seem to be
they are in an almost microscopic

over-monied people.

numerous,
minority.

Most

of us compete only with our class or with

one just above us.

iture,

either

Competition has

its

ment of human
properly,
puller,

action

it

Competition means expend-

energy or money, or of both.

of

may

right place in every depart-

affairs;

leading to better
is

for,

when considered

be an incentive, a pusher and

things; but when

its

devoted wholly to show purposes, and I

[S3]

How
am

to

Save Money

using the word " show " advisedly,

menace to good

society, disgusting

it

is

and danger-

and productive of the worst result.

Those who live beyond their means, and by

ous,

that I do not mean getting in debt where there is

no help for it, are positively dishonest as well as
supremely foolish. Nothing is to be gained. It

means the

stifling of conscience, the loss of respect,

the annihilation of economy, the production and

development of extravagance, and stands for the

ruin of the home, and the breaking
business.

down

of the

It accomplishes absolutely nothing in

the round-up.

Its

maintenance neither creates

nor holds the impression desired.

It

gives

no

return for the expenditure.

May

I not paraphrase the old rule?

It

might

truly read,

" By their extravagance may we know that

"
they are not what they seem to be
!

[36

Ficved

Expenses

CHAPTER IV
FIXED EXPENSES

EVERYBODY,

except the pauper, receives his

material necessities,

comforts, and luxuries

by the expenditure of money.

This money

is

expended either systematically or promiscuously.

it is known as a fixed expense, setupon with premeditation and with an appre-

If the former
tled

ciation of financial responsibility.

The

successful

under a

man

invariably lives and works

expend
any other period, approximately

fixed expense, allowing himself to

for a year, or for

what he has laid aside or proportioned for the

purpose.
For example, he decides that be can
afford to live at a cost of four thousand dollars a

year, and he does not allow himself to exceed that

amount for regular living expenses. If he has

much money saved up, or an unexpected thousand
dollars comes in, he

may

decide to purchase an

automobile or to take a trip to Europe; but he

does not consider either as a part of his fixed
expenses.

They

are extras, and are allowed to

occur only as extras and not as a part of the

regular cost of living.

he

stands,

regulates

In this
his

way

he knows where

outgo to his

[37]

income,

How
exceeding

it

to

Save Money

only when conditions either demand

or suggest an extra expenditure.

This fixed-expense principle

is

carried into his

business and into all his financial transactions.

he be extravagant, his extravagance

to be a part of

is

If

not allowed

what he considers the regular cost

of living.

duty of every one, whether his income

be ten dollars a week or ten thousand a month, to
It is the

establish a fixed expense, a definite scale of expen-

and to keep within that no matter how

much he may spend as extras, considering every
dollar beyond the amount appropriated as not a
diture,

part of living or necessary expense, but as a justifiable, foolish,

or criminal extravagance.

the latter, bad as

it is, is

not so disastrous

prepared for and the responsibility of

Financial failure

is

Even
if it is

it realized.

usually due, not to thought-

out and premeditated action, but to thoughtlessness

and carelessness in expenditure, to hit-or-miss

and to that prevalent and chronic

speculation,
disease

known

Men who

as taking chances.

think and care

men who do not

care, never

financial matters.

[88]

may do wrong, but

do right, especially

in

How Much

to

Save

CHAPTER V
HOW MUCH TO

NOW much

SAVE

should a young man, a single man,

a to-be-married man, a married man, a

of any age, or a corresponding girl or

man

woman,

put aside as a saving or investment fund each

week, each month, or each year, or during any
other selected period?

To

establish either

anybody,

save

oneself,

and unfair, and,

done at all.
It

is

set

or general rule for

would be unreasonable
doubt

really, I

if

it

could be

obvious that the multi-millionaire, with an

annual income of millions of dollars, more or

less,

can save ninety-nine per cent of his profits, and

yet keep the wolf of poverty from getting any

nearer to him than an adjoining street.

self-evident that the family

It

is

man, whose wages are

but a few hundred dollars a year, cannot put

more than a small percentage of his earnmore than a microscopic part of them,
if he would give himself and his family the common and ordinary necessities of life, luxuries
aside

ings, or not

never to cross his threshold.

No

percentage rule, or any other rule, can be

[S9]

How

to

established with this

with the extreme

Save Money
and

of income,

inequality

variation

of living

expenses,

and while men who deserve to succeed, succeed and

fail, and undeserving men meet with the same
fate.

^Vhen we
close to

live as

we should

live

(and that means

Nature), when we become

satisfied

with

legitimate comforts, and rightly abhor extremes

in

luxury and inexcusable extravagances, we

may

then establish a somewhat universal footing, and

a

standard of

living,

which

admit of the

will

framing and keeping of some

definite

rule

of

saving.

The

condition of our present status of semi-

civilization

aside

makes

easy for one

it

man

to put

a large proportion of what he earns or

otherwise

receives,

and utterly

impossible

for

another, who works as hard or harder, and who is

in every way as deserving or more so, to approach

anywhere

near

amount of

his savings.

Therefore,

it

him,

proportionately,

the

would appear to be impossible to

establish a law of saving, or to

rule of giving,

in

and

form any general

this condition will

remain until

more advanced, and

are mentally able to grasp and properly weigh
true values, and become intelligent enough to give
as much credit to the man who does what he can,
[40]
the people at large become

How Much
be

it

ever so

little,

to

Save

as to the one

who accumulates
it is more than

a dozen times more money, because

a dozen times easier for him to do

Many

so.

a dollar-saver makes a greater eifort to

assemble and hold his single dollar, than does the

hundred-dollar man,

who

finds saving as

easy as

spending.

A more terrible commentary could not be made

upon the mischievous quality and contemptible
charity of our modern brand of adulterated justice, than the placing of the name of the heaviest
giver in quantity at the head of the subscription

paper, and thereby measuring the generosity of

man, even

in the

Church itself, by the amount he

and not by what he gives

gives of his property,

of himself.

The one

is,

that

to save

rule of saving that can be established

it is

all

the duty of every one

who can

save,

he can, provided he does not sacrifice

a greater duty by so doing.

Perhaps I can make

one's

there

To

duty to save
is

all

it

little

plainer.

It

is

he can economically save, for

such a thing as extravagance in saving.

save more than one should save

is

meanness

True
economy stands for the good of all concerned, and
demands an appropriate saving, neither more nor
It forbids parsimony, and is equally opposed
less.
to save less than one should save

[41]

is

criminal.

How

Save Money

to

any sort of extravagance, or to any accumulaabnormal proportions.

Few of us, unless we have experienced poverty,
or have lived close to it, have any adequate understanding or realization of the purchasing and
sustaining power of the moderate income, or of a
small sum of money, which will do, if permitted,
much more than it is usually allowed to accomplish, and is sufficient for systematic and conto

tion of

tinuous saving.
I do not apologize for venturing the assertion

that the great middle class of people wastes a

third of what

run; that

is

it

spends, taking people as they

to say, that

substantially the same

forts,

and pleasures,

be

amount of

if

necessities,

com-

they paid out two-thirds

money they now spend or otherwise

of the
tribute,

No

most folks would receive

dis-

and saved the balance.

matter how extravagantly inclined we

no matter how much we

the good and

may

bad things money

love

may

money, and

will give us,

we

cannot occupy more than one bed at a time, nor

wear more than one

suit of clothes at once,

nor

demand that we carry many

own more than a few suits of

does good society

spare beds
clothes.

or

The

necessities

of

life

fulfilment of but a few conditions

First,

Something to

eat.

[42]

consist of the

How Much
Secondly,

place to live

to

Save

in.

Thirdly, Proper clothes.

Fourthly, Proper care when sick or disabled.

Beyond

nothing, however

The

body demands
may want something.

these things, the physical

much

it

present and economic

conditions,

however,

add a Fifthly, that of some provision for emergencies and the future; and the better part of us,
our minds,
requires a Sixthly, that of mental food, and opportunity to receive those things
which stand for something beyond the physical,

and which reach out to the betterment of mankind,

education, development, and enlightenment.

Something to eat costs comparatively little, if

we would confine ourselves to wholesome food, the
kind of food worth eating. The costly table is
maintained at the sacrifice not only of digestion

and health, but money as

well.

place to live in need not heavily tax one's

income, except in

compulsory
so-called

cities

where there seem to be

extravagances,

compulsory

and

many

extravagances

of

the

can

be

avoided.

Appropriate and comfortable clothes are essential, but well-dressing does not demand half the
expense that most people think

it

does.

It

is

remarkable how the application of care and sense

will

reduce the

size of the clothing bills.

[48]

It has

How

to

Save Money

been said that the rich spend

does the average

member

less for clothes

of the middle class,

than

who

seems to be laboring under that popular and

prevalent delusion that appearances, and extrav-

agance with

its

accompanying

to social standing.

am

cost, are necessary

inclined to take excep-

tions to this view, because the average millionaire

and

his family are likely to be foolishly extrav-

much for vulgar show as does

little money, who would appear

agant, and to care as

the society

man

wealthy.

This devotion to appearances, often

of

carried over the line of sanity,

responsible for

is

ninety per cent of the inexcusable waste and tin-

But the man of money,

sel show of the world.
who does not need to be a spendthrift, is often
more addicted to show than are those who have
the flimsy excuse for doing

it,

that they may be

reckoned to be more than they are.

Over-dressing, and any other form of extrav-

agance, injures rather than helps one's reputation,

for the over-dressed and

woman

I think they deserve pity

tion.

more than condemna-

With extravagance aU about them and on

them, they

demn

showy man and

are plain and simple fools, and sometimes

criticise

freely,

their neighbors

for

and invariably condoing what they do

themselves.

Any

attempt at over-dressing

[44]

is

not only wrong

How Much
but

in principle,

no

prestige,

it

real

is

to

Save

pure idiocy.

satisfaction,

to

party himself or to those who see him.

efits,

no

It gives

either

the

Its ben-

there are any, are of purely imaginary

if

growth.

Extravagance

more to be condemned
any other direction, for
anybody in any way. There

in dress is

than over-expenditure
it

does no good to

is

no excuse for

It

it.

for improvidence.
future.

It incurs

in

is

primarily responsible

It places a

mortgage on the

an indebtedness which

is

seldom

and right are sure to foreclose,

and at a time when the debtor is least able to

paid, for equity

stand the strain.

Saving

may

necessary, that the sick and disabled

is

be cared

and accident
future

is

for.

is

Sickness comes in the night,

likely to occur at

any

time.

The

always with us, as well as beyond us.

It bears a significance for the present equalled

only by the present

The

future

is

itself.

in the

hands of the present, and

is

not likely to prosper unless the present provides

for

it.

We

must

either meet the future or die,

cannot meet

we

it

and we

properly or economically unless

demands and prepare for it.

In no other way can we provide for the future
than by saving in the present, by putting aside
[45]
foresee its

How

to

Save Money

To

things which the future will require.

fail to

we can do it, is to commit a sin against

ourselves and against our neighbor.
There is likely to be little over-expenditure
along mental lines. True, the bookworm, who only
crawls through life, is as big a fool as the man
do

this, if

who

lives in the fields of gold.

Occasionally some

one pays for education more than

it is

worth

for

the mind-filling craze, which breaks one's health,

which over-works the brain, even

what he did from good motives,

worst forms of extravagance.

the doer did

if
is

It

is

one of the

no better

than the placing of good things in a storehouse

incapable of taking care of them.

This fighting one's way through college, to

obtain an education at the cost of health,

is

to be

One had better be strong and healthy,

with a body vigorous enough to use an untrained
mind, than attempt to work a brain-full of education, with a frame too weak to carry it.
The good of all training is in its distribution,
and the rein the use that is made of it,
ceiver of a college education, who is unable to
distribute it, has wasted his time and money, and
deplored.

others' time, in the getting of his education.

The

first

and best thing for a man to do is to

what he can do and

locate his level, and ascertain

what he cannot do, to

find out

[46]

what he needs and

How Much

to

Save

what he does not need, and then to adjust

rate of expenditure to

it.

absorb his income, and

it

his

may or may not

may or may not allow
It

him to save;

Any

attempt to

beyond our means adds

live

nothing to our reputation and takes much away

from

it,

for the world,

as

filled

it

is

with the

superficial, is sure, sooner or later, to reckon

us

what we are and to level us unmercifully to

our proper plane before it gets through with us,
or before we get through with it.
for

It

is

our duty,

first,

to take care of ourselves

to-day; and, secondly, to prepare for to-morrow.

To

carry out the second proposition does not

mean a

sacrifice

responsibilities

of to-day's necessities, for the

of to-day must be met

whether

or not there be something left over for to-morrow.

But when one has more than enough

necessities,

he

is

a criminal before every bar of

justice, if he does not provide for

Take care

for present

of to-day

first,

to-morrow.

then take care of

to-morrow, but do not forget that your prime

duty

is

to provide for to-morrow after

you have

properly taken care of to-day.

Not to save when one can save is a refusal to

make a reasonable sacrifice for the sake of the
future.

It places a

man

in the criminal class

and

suggests the advisability of framing a law which

[47

How
will prescribe

to

Save Money

a punishment beyond the natural

penalty always accompanying improvidence.

He who
all

will

not save when he can save, and save

that he should save, not only robs himself and

his family, if he has one,

but deliberately, volun-

and intentionally becomes a menace to society, a member of the chain gang of paupers, of
those who must rely upon others or perish when

tarily,

disaster arrives.

Considerably more than half of the married

couples begin married

life

with a capital limited

to the clothes they wear and sometimes they are

deeply in debt; and yet they allow themselves to

enter the most holy state given to

man

or

woman

without any preparation for the future, which

they voluntarily leave entirely unprotected.

Of course none of

these improvident people are

in love with their mates, for true love is cautious

and reasonably

intelligent,

and refuses to take

unnatural chances, and never

a probable future.

fails to

They mistake

provide for

infatuation for

and without thinking about it, they foster

the idea that two may live for the price of one.
Nothing can be more illogical, nor more carelessly
love,

founded upon the quicksands of folly.

If I were permitted to make a few laws, I would
formulate one prohibiting marriage until one or

[48

How Much

to

Save

both of the contracting parties had saved

suffi-

money to pay reasonable expenses for a

I know that I am shocking the sentimenyear.
talists, particularly those who love to be shocked,
and who prattle and talk about the love they have
cient

never

felt

and do not understand.

The man who

is

not willing to save before mar-

riage enough to maintain himself and his wife for

a year has not

energy and character

worthy to become a hus-

sufficient

to suggest that he

is

band and father; nor

is

he in love with his wife,

for love always protects, and love

Sentiment

may

is

never blind.

be without eyes or near-sighted,

but love does not have to wear spectacles.

The man who

will

not make a sacrifice in or-

der to properly protect a probable family mistakes passion and selfishness for love, or else he
is

a fool; and the fool has no right to marry.

It

is

easier to save

ried than

it is

expenses are
will

not

is

mar-

to do so afterwards, because living

less,

save

money before one

or should be so.

without

the

The man who

cooperation

of

his

economical wife, and must be coerced into doing

right,

is

an unsafe proposition, and ought to be

relegated to an enforced bachelorhood.

Premature marriages, occurring before proper

provision

is

made

for the future, are the cause

49

How

to

Save Money

of millions of break-downs and down-falls, and

are primarily responsible for family wrecks, and

often for divorces and every kind of dissipation.
It

the duty of every one to establish an

is

economical policy, which will compel him to save

the difference between his

income and what

is

For example,

actually essential for living.

couple can

live

with a reasonable degree of com-

fort on a thousand dollars a year,

come

fifteen

is

duty to save

hundred

five

and

their in-

dollars, then it

hundred

proportionate

this

if

dollars,

saving

until

and

is

their

to continue

they

have ac-

cumulated a fund which appears to be large enough

any condition

to meet

likely to

business failure and old age.

arise, including

To save up to this
To accumulate be-

point

is

right and necessary.

yond

it

shows avariciousness, a low character, a

contemptible and inexcusable lack of public spirit,

and no respect for the common decencies of

I

am

speaking harshly, because I

feel

life.

that I

am

and I do not apologize to anybody. If I

wrong, then lay the blame at the door of my

right,

am

sincerity

and to the long reviewing of experiences

with thousands of peple.

Over-saving

is

as

bad

as under-saving, perhaps

even worse, because there

may

cuse, although I doubt

for not saving

it,

50]

be an apparent ex-

when one

How Much
can save, while there

is

to

Save

absolutely not even the

shadow of reason for over-accumulation.

Under-saving robs the man and his family, and

faintest

Over-saving de-

creates expense for the town.

bauches the community.

No

one has a right to save beyond a sum which

will give
is

ample provision for

accumulating for a

pose.

It

is

his

his future, unless he

specific

and laudable pur-

duty to continue to save until he

has reached the point of protection.

Many
that
life,

of us can save much more than we think

we can, not by eliminating the necessities of
but by cutting corners, so to speak.

If one has a desire to save, he will find

more opportunities to do

so than he

many

had at

first

thought existed.

What we want

to do,

we generally do; many

of our wants, however, are purely imaginary.

desire to save,

and an appreciation of the

value of protection, will invariably find a

way

of

accomplishment, unless conditions absolutely forbid.

penny a day for the sake

all.
There are
few of us who cannot put away a cent a day, and
It is better to save a

of principle, than not to save at

if

a cent

matically.

is

all

that can be saved, save

it

syste-

How
If

to

Save Money

jou would command the respect of your em-

ployer, the respect of your neighbor, and the re-

world at large, save, and save

and be known as a provident man.
Not only will you receive self-satisfaction and prospect

of

the

persistently,

tection,

but you

will

be better liked and be more

respected by everybody, even by the superficial.

The bad man is not respected or loved by those

and the extravagant man, the man
who can and will not save, is not only a knave,
of his kind,

but a consummate fool, and he is so considered

by those above him, with him, and beneath him.
The saver, who systematically puts aside even
the smallest sum, creates by so doing a definite
asset, which has a value beyond its intrinsic worth,
for it helps to establish reputation and is the
badge of character, integrity, and good sense.
The very principle of saving, itself, irrespective
of the amount saved, if one saves all he can, puts
the saver into a higher class, and gives him a tangible something which helps him to live better in
the present and which protects him in the future.
Men who save are men of mark men who do not
save are marked men.
;

[52]

Eootravagance

CHAPTER VI
EXTRAVAGANCE

THERE

Is

not even a shadow of a semblance

of excuse, right, and reason for any form

or kind of extravagance.
everything

it

comes

It

works injury to
has never ac-

in contact with,

complished anything for the good of anybody, nor

has

it

contributed the gentlest push to the slow-

est propulsion of the slightest progress.

Extravagance does not possess a

ing quality.

It

is

bad

single redeem-

in substance

and

in prin-

no place in human affairs, except

and to demoralize. It gives no return
anybody save transient pleasure, or, rather,
It has

ciple.

to injure
to

the imitation of

of wine,

is

it,

which, like the over-drinking

more than counteracted by disastrous

results.

Meanness
nothing in

is

not a part of extravagance.

common

and inexcusable;

with

yet,

It

it.

bad as

a small percentage of the

is

a sin in

it is, it

evil

It has
itself,

possesses but

contained in ex-

travagance.

The injury meanness does may be confined to

itself, and to those who come in immediate contact
with

it,

while extravagance

[53]

is

a public sin con-

How
fined to

Save Money

to

no narrow boundary and making always

for general harm.

Economy

as far

is

removed from meanness, from

extravagance, and from those things which both

stand for, as sunshine

is

opposed to midnight

darkness.

Economy
of

is one of the necessities and essentials

Without it permanent progress is imposand no work worth while can be accom-

life.

sible,

plished.

Economy
it

spoiled.

is

Economy and

saving are closely

allied,

without the former the latter could not

Saving

is

Without

the world's preservative.

is

everything

because

exist.

the result of economy, although the

economy underlies saving.

economy results in proper
accumulation,
not too large and not too little,
for economy has no sympathy with the miser and
no mercy for the spendthrift.
The difference between success and failure may
be found in the analysis of economy and extravprinciple of

The

practice of true

agance.

Progress

upon

strict

itself is

founded upon economy, even

economy, because of the power

it

has

over the character of the people.

Hoarding
storehouse.

is

not economy.

He

receives,

The miser

is

but a

but does not distribute.

[54]

Extravagance
Economy

In business,

cumulates that

it

everything

in

ac-

else,

and meet the

direct

exi-

It does not obtain for the sake

gencies of famine.

of keeping;

and

may

it

saves in the present that

it

may

properly protect the future.

The

practice of economy

is

dae to an apprecia-

tion of the necessity of self-preservation combined

with the desire to progress properly and to build

a suitable foundation.

Nobody

ever amounted to anything, either in

business or out of business, in the professions, or

in

any other walk

in life,

from the framing of

law to the making of shoes, unless he was a successful economist, as able to save as to spend.

am
to

not referring wholly to financial saving, but

economy

broadest sense; for one can be

In the

a sort of economist, and successful In a way.

he

Is

not able to make or to save money.

professlonalist

Money

lacks

the

to

ability

Many

If

accumulate

him seems to be an unknown

quantity, hard to get and easy to get rid of. He
does not, or will not, save money; he may,
money.

to

however, be a success, because, while he

ficient In financial

economy.

acumen, he

He may

Is

de-

be proficient in

systematically and persistently

store himself full of

of useful knowledge,

may

may

some material,

and

In

this

practise and maintain a true

[55]

some

kind

direction he

economy with

How

to

Save Money

an absence of extravagance so far as conserving

and distributing

mental commodity are con-

this

If he did not do this, that

cerned.

economy along

his line of action, he

is,

practise

would amount

to nothing.
It

is

a fact that financial success or business

accomplishment

is

utterly

without

impossible

and persistent saving, the continuous practice of financial economy, without

more than an occasional appearance of extravagance, until one has amassed a fortune.
Extravagance in money matters, and in all else,
particularly if continuous, invites failure, and the
basic, systematic,

invitation

True,

is

invariably accepted.

many

of our multi-millionaires are vul-

garly extravagant.

They

are

men

of coarse

and

distorted ideas of right, decency, and propriety.

Their homes are show-houses for the display of

things not worth having.

Their garages, stables,

and gardens are dedicated to the god of appearances, and not to the comfort of the occupants or
their neighbors.

they receive.

They overpay

for everything

Superficial people stare at

them with

eyes of envy, while the sense of the world

is

sorry

full of pity for the misguided

for them, and is

magnates of wealth, who are no better than plain

simpletons, fools, or idiots, mentally incapacitated

to perform the proper functions of

[56]

life,

unable

Extravagance
assume any manly part, or

to

else

are inten-

God and
man.
But these rich people at one time practised
economy, perhaps the strictest economy; for, if
tional criminals before the bars of both

they had not done so, they could not have accumulated sufficient funds to permit

ranks of financial degenerates.

them to join the

They were

the start, although the practice of their

wise at

wisdom

gave them greater opportunity to embrace superlative foolishness.

But

omy

let

is

not the reader assume that early econ-

The

responsible for later extravagance.

practice of economy cannot be held responsible

its results, which may be bad or may be good,
we choose to make them. The best things of
life, including economy and health, can be used to
injure ourselves and others.
While a professional man may attain some suc-

for

as

cess without resorting to financial

he

may

economy, while

be able to get along without giving

attention to money, or to the saving of

business

may

man

is

doomed

much

it,

the

to immediate failure,

and

never hope to rise above the ranks of insuf-

ficient

accomplishment, unless he handles his busi-

ness

and personal

and

systematically

affairs without extravagance,

and

continuously

every form of legitimate economy.

[57

practises

If he does not

How

Save Money

to

have the faculty or inclination to do

this,

he can-

not meet with any degree of satisfying success.

I

am aware

that

it

is

extremely

at

difficult

times for some people to save, but any one can

avoid extravagance,

A man

if

he

will.

of small income, with a large

ing family,

may

more than make both ends meet;

kind of stuff

is

and grow-

find it well-nigh impossible to

in him,

but,

if

do

the right

whatever be his walk in

life

or his responsibilities, he has no excuse for not

trying, for not making every effort to save, even
though he may not save anything.

The very determination

to

save,

in

itself,

coupled with a willingness to make reasonable

sacrifices to save,

What we

may

lead to ultimate success.

try to do we

may

not always do, but

what we do not try to do we never

The

do.

practice of the principle of saving, as

as the value of the

much

amount actually put away, con-

tributes to accomplishment, to safety, to protec-

and to probable success.

Nothing impresses a business man more than

tion,

the ability to save on the part of one

for employment.

who

applies

Instinctively the employer has

confidence in a saving clerk, and

is

suspicious of

means or beyond them.

the one who lives up
Even though the employer himself is extravagant,
to his

[58]

Extravagance
he invariably bitterly condemns the employee who
copies his foolishness.

Go

any store or office, and line up on one

room the men who save and who live
properly, and on the other side those who accumulate nothing and who are extravagant, and you
into

side of the

will

have on one side a

success,

line of

and on the other

people of possible

side a line of almost

certain failure.

Every captain of industry, every millionaire,

and every prominent business man will tell you
that the beginning of their fortune was founded
upon their savings, and that the success they met
with was due to the practice of legitimate economy, and to an abhorrence of every kind of extravagance.

When

they made

five

dollars a week,

they saved at least a small part of

it,

or they

made a most strenuous effort to do so.

Making an effort to do a thing is next
actually doing

to

it.

Every professional man or

scientist will posi-

tively assert that the beginning of his accomplish-

ment was due to a willingness and an

effort,

not

only to accumulate knowledge, but to properly

preserve

it,

that

it

might be used when wanted, and

none of these men were extravagant along the

of their education or work.

[59]

line

They may not have

How
been fortunate in

had

Save Money

to

many

directions,

and may have

idea of money, but within their labor-

little

atories they practised true economy,

and seldom

tolerated any form of waste.

Every

failure in

life, if

on the witness stand,

without

forced to

will freely

qualification,

that

make

affidavit

acknowledge, and
lack

of

proper

economy, with or without a superabundance of

extravagance,

was

largely

responsible

for

his

downfall.

Let me relate an incident, which came within

my own

personal experience.

hard-working

boy began to save at the age of fourteen. He

put away aU he could without sacrificing necessary comfort and health. When he was twenty-six
he had saved a thousand dollars, was drawing a good salary, and was properly providing
for his family. He would have put aside a larger

sum had

He had

it

not been for unavoidable expenses.

He

was am-

go into business for himself

in a line

never been extravagant.

bitious to

which required considerable capital.

His thou-

sand dollars would have been but a drop in the

bucket of financial necessity.

Therefore, he could

not hope to start in for himself, imless he could

borrow money or obtain a partner with sufficient

fimds. He was well aware that a partner supplying aU of the capital might be imwiUing to give

[60]

EtJctravagance

him more than an insignificant interest in the

business.
Not by accident, or because he was
lucky, he found a man with less experience and
with more money than he had, who wanted to establish himself in this line of trade.

with some means and

less

This

experience was as anx-

ious to find a person of experience as

friend was to secure a capitalist.

My

my young
friend with

only a thousand dollars borrowed a large

his partner,

and put

all

of

man

it

sum

of

into the business, that

they might be equal partners with equal capital.

The thousand-dollar man was not really in debt,

is commonly considered. Nor did he literally borrow the money wholly on his own responsias debt

Of
all of it went into the business.
had to pay a fair rate of interest, but
True, my
that, too, came out of the profits.
friend had ability, but the deal was carried through
largely because he had saved a thousand dollars.
Without that money he might have remained a
bility,

because

course, he

clerk for

many

years or for a lifetime.

This sum

in itself amounted to little, but the fact that he

had saved it with necessarily large expenses, and

with

prima

little

opportunity

for

accumulation,

was

facie evidence that he had in him the in-

trinsic stuff

of business

which

is

success.

a part of the very substance

If he

had not shown

his

capacity for saving, and for saving against ob-

[61]

How
stacles, if
fices, his

to

Save Money

he had not been willing to make sacriexperience and ability would not have

To-day, he

justified the connection.

successful

men

is

one of the

in his city.

Let me relate another incident, which came also

under

my

personal observation.

An

acquaintance

of mine was a man of considerable

headed and energetic.

ability, cool-

For many years he

a handsome salary, and at no time was

it

drev/

neces-

sary for his expenses to exceed half of his income.

He and his wife lived at the most expensive hotels.

He did not save. He was extravagant. Because
his

many things
At the age of sixty he
without money and without posi-

income permitted him to have the

he wanted, he had them.

found himself

He became

tion.

a burden to his friends, a finan-

upon the sea of life.

During the forty years of his active business
life, when he was receiving more than an average
income, he refused to make provision for the
Before any court of common sense he
future.
would have been convicted of criminal extravagance. At sixty he was a broken man, and yet
physically and mentally able to do active work.
cial derelict drifting

The

position of treasurer in his

company was

vacant, but the directors discharged him, instead

of appointing him to the position.

and

ability he

was able to
[62

fill
1

In experience

the place.

He was

Extravagance
popular, and he had been honest and reliable, and
there was no black

mark

against his record.

friend of his at the directors' meeting suggested

name

his

for the

position,

a place which paid

twenty thousand dollars a year.

Election seemed

probable when the president remarked:

" I am very fond of Mr. Blank. He has been
a good man, and has been faithful to our inter-

He

ests.
is

has more than ordinary capacity, and

able to

and

will

fill

almost any position; but I cannot

not trust the financial management of

company in the hands of a man who does not

know how to handle his own money, who has never
saved a dollar, and who has practised every form
this

of extravagance."

The words of the president weighed a ton, and

became the mill-stone around this man's neck,
which carried him to the bottom. He went down
as those have gone down before him, because he
had nothing to support him save ability, experience,
self,

and

faithfulness, a foundation

good

in it-

but which rests upon the sinking sands of

it is propped up by the stones of

money; for money is a part of business, and those
who cannot keep money, cannot keep business.

business unless

Still

another incident:

young man

position through no fault of his own.

lost his

He had

been receiving two thousand dollars a year, a

[63]

How

Save Money

to

good salary for one of

his

age and experience.

As

he had saved nothing, because of extravagance,

it

was necessary for him to go to work or starve.

Good

positions are difficult to find,

to wait a long time,

and a man has

frequently, before he can

lucratively locate himself.

This young

man

could

not afford to wait; therefore, he was forced to

take a subordinate position, and was obliged to

work up from the bottom all over again. At the

five years he was no better off than he had
been five years before.
If he had not been extravagant, but had saved a little money, which
he could have done easily, he would have been able
to wait for a better opportunity and would not
end of

have lost business caste.

An

extravagant man, who loses his position,

and who has not saved anything, is at a tremendous disadvantage. He must get to work immediately, and is usually obliged to take what he
can

find.

He

cannot hold his position in the busi-

ness world and wait for the right opportunity.

The world
His vulnerable parts are exposed.
knows that he is out of a job, and because he is
obliged to take an inferior one,

it

assumes that

he lost his last position through his

He

own

fault.

goes down, because he has nothing to hold him

up, and misses success.

I think that I

may

say truly that success

[64]

is

due

Extravagance
to distinct

and

willing sacrifices, to the doing

away

with every form of extravagance, to the systematic

saving of money, to the gaining and preserva-

and to integrity and honesty.

Don't imagine, young man, or man of any
age, that the possession of automobile or motorboat gives you even the tiniest boost into any kind
tion of knowledge,

of society strong enough to stand the

zephyr of the gentlest breeze.

while

is

built of stronger stuif

faintest

Society

worth

than that repre-

And

sented purely by the expenditure of money.

don't get into your head, or

if

you

do, get

it

out

with the greatest despatch, that your credit at

the bank, at the grocer's and the market, or any-

where

else,

has gone up a cent because of an au-

tomobile or a motor-boat or anything else of that

class.

down

The chances
several

are that your credit has gone

especially

dollars,

Fully sixty per cent of

all

at

your bank.

purchasers of motors

for land or water cannot afford the luxury, and

one-half of this sixty per cent have either mort-

gaged their real estate, if they had any, or made

some other unjustifiable sacrifice, that they may
travel in style.

The names

of a proportion,

and

perhaps a large one, of automobile riders are to

be found in the mortgage department of the regis-

try of deeds.

The purchase

of anything one cannot easily

[65]

Hoic

to

Save Money

is an automobile or
works
against the financial credit
a motor-boat,

afford,

if it

is

to be seen, as

of the owner, and does not give him any reputation except that of being extravagant.

If he can

enjoy what he cannot afford, well and good for

him.

If he can be

happy

in a motor-car which

represents a mortgage on his house or the cash-

ing of a

life

insurance policy to the lessening of

the protection due himself

and family,

I say, well and good for him.

He

is

again,

an undesir-

able citizen, imfit to be a husband and father, un-

trustworthy, unreliable, and unrespected.

The

smile of extravagance never was put on to

The day

of reckoning is sure to dawn dark

There is only one result, and that
is financial embarrassment with or without the
wreck of prospects, reputation, and family. Every
extravagance (everything is an extravagance if
it cannot be afforded) has to be paid for, and if
it is not paid for by money which can be spared,
the settlement is made sooner or later, and usually
sooner, at an expense which makes the usurer's
interest seem small in comparison.
I am not asking any one to give up all the comstay.

and stormy.

forts of

life,

or to place himself on the rack of

business, or to live continuously in a windowless

laboratory of science, never to look up to the blue

skv or down at the green grass, for everv one

[66]

Extravagance
has a right to rest, comfort, light, and sunshine.
These things all contribute to the spiritual upbuilding of man.
But he who will not sacrifice

extravagance and luxury for better things,

will

never realize any laudable ambition, assuming that

man

such a

can have one.

Every accomplishment is born in travail.

Without pain nothing has ever been done. Sacrifice accomplishes every attainment.
The men
on top are those who worked the hardest at the
bottom.

The most

skilful wielder of the

sword

has successfully carried the gun.

The

practice of economy stands for success, al-

though none of its practitioners may ever

above the common level.

The

rise

practice of extravagance leads to ultimate

and certain failure.

By economy we may succeed; by extravagance
we surely fail.

[67]

How

Save Money

to

CHAPTER VII
PETTY EXTRAVAGANCES

EVERY cent

is

worth a

cent,

and every dollar

represents one hundred cents.

Take

care of the cents, and the dollars will take

care of themselves.

Half of the waste of the world

lar

is

below the dol-

mark.

Many

man

loses

many

dollars,

a cent at a

time.

Small or petty extravagances, the promiscuous

or careless spending of a few cents, lead up to
losses of every size.

One who does not keep an account, and

enter

every out-going cent, can have no conception of

the leaks, which in time are large enough to flood

him with

disaster.

cent, or

nickel, or a dime,

is

small in

itself,

but large in the aggregate.

f~

Most

spendthrifts have some appreciation of

large sums, and

money

many

in the bulk,

of

but

them do not throw away

limit their extravagances

to the constant expenditure of pennies, nickels,

dimes, and dollars, yet fail to understand the rea-

son

why they

are always short of money, and

they are never able to get ahead.

[

68

why

Petty Extravagances

careful scrutiny of the lives of successful

and weighed every

in small things,

men

most of them were economical

will discover that

cent.

money began

Practically all accumulations of

with small savings, with an appreciation of the

value of a cent.

Of course,

may

this

be carried too far, and

is,

perhaps, partly responsible for the meanness of

men

of wealth,

who seem more

willing to

pay

five

thousand dollars for an automobile than to give

five

cents extra for a hair-cut.

this

petty saving

may

But, although

be the foundation of con-

tinuous closeness and meanness, without

cess

is

it

suc-

and a competence can never be

impossible,

realized.

There

is

a vast gulf between the miser and the

The former hoards

careful saver.

of keeping the money,

and the

for the sake

latter saves for the

sake of principle, and for protection.

The

conscientious

saver

may

even approach

meanness, but better that than the opposite, for

the

mean man

nothing

else,

is

he

seldom a public charge

is

The strenuous
tinuous

display,

if

he does

able to take care of himself.

life

we are

offer

living,

every

and the con-

opportunity

for

extravagance, and place temptation upon every

corner.

One must brace

oneself against

it

or

fall.

There are a thousand petty extravagances, each

[69]

How
by

amounting to

itself

ducing a disastrous

Take

Save Money

to

little,

the soda water and

There

ample.

is

but altogether pro-

total.

pop beer

fad, for ex-

not a hamlet large enough for

a post-office, without one or more soft-drink counters,

which are responsible for a habit having much

to do with the careless expenditure of nickels.

In the

first

precarious
healthful.

place, the drinking of soft drinks

many

of

Although they may not be injurious,

they are usually over-sweetened, and

pure.

They do not quench

may

be im-

the thirst, but, in-

stead, stimulate the thirst for another drink.

far as

is

them are neither cooling nor

So

I know, not one of them contains any

medicinal or tonic property.

Their value appears

to be largely limited to the advertisements of them.

Plain water

is

always procurable, and few of us

drink half enough of

it.

Water

is

Nature's own

and best thirst-quencher, and is usually free.

Hundreds of thousands of young men and
women average twenty cents a day for soft drinks
during the summer. It is a fact that the majority
of soda, root beer, and tonic drinkers are those
who~ cannot afford the nickels, and it is also a fact
that the majority of well-to-do people are not

regular patrons of soft-drink bars.

believe this,

ter

and

size

If

you do not

stand in front of a soda-water coun-

up

the drinkers.

[70]

You

will find

that

Petty Extravagances
most of them have small incomes, are clerks and
shop-girls, and others to whom five cents is quite
a sum of money.

Bear

in

mind that

am

talking of averages, not

Comparatively few of us are soft-

exceptions.

drink abstainers, but the better class of us are not

soft-drink drunkards.

The next

time you have your shoes shined by a

professional boot-black, carefully observe the ap-

pearance and probable financial condition of the

patrons of the boot-black booth. A large proportion of them are shabbily dressed, and many of
them wear shoes not worth a shine. True, many

a well-to-do person
blacking-stand,

is

obliged to use the public

because no one

is

supposed to

carry a box of shoe-blacking with him, or a polishing brush; but I

am

referring to the habitual

patron, who deliberately leaves his home with his

shoes unpolished and stops at the nearest black-

ing booth.

This he does every day at an expense

of thirty-five cents a week.

box of the best

shoe-polish costs ten cents, and there are, at least,

a box.

fifty shines in

Fifty self-shines, then, cost

ten cents, and fifty shoe-stand shines cost two dollars

and

fifty

cents.

Furthermore, a self-shine

takes half of the time required for a boot-black

shine,

and time

Then

there

is

is,

or should be, money.

the shaving proposition.

[711

first-

How
class shave costs

shave costs

less

to

Save Money

from ten to twenty

The

than a cent.

cents, a self-

self-shaver can

shave in half the time occupied by the barber.

Figure

it

out for yourself,

one

or seven cents a week, or, say,

or one dollar and

five

cents a week.

that comparatively few

and

acter,

for

cent a shave,

fifteen cents

men

of

It

is

a shave

a fact

standing, char-

intelligence patronize a barber, except

Most

a hair-cut.

shavers, and

many

of

of them,

these men are selfwho can afford to pa-

tronize the barber-shop, shave themselves because

of the amount saved and the cleanliness of the

Very few cannot shave themselves,

I doubt, howthere is any man of any intelligence, who

operation.

even
ever,

if

they think that they cannot.

if

cannot use a safety razor.

Perhaps dress, more than anything

else, is

re-

sponsible for large and small extravagances, especially

by those

of small incomes.

It has been said that the average

less for his clothes

employer pays

than the average employee does,

and that the majority of well-to-do people, barring the newly rich and the snob, are more economical in dress

than are those of small incomes, who

seem to think that the man

is

known by the

clothes

he wears, and that they, therefore, are known by

the clothes they should not wear.
I have considered dress in another chapter, but

[72]

Petty Extravagances
in passing, let

me say

that the average person ex^

pends double the amount necessary for plain, simple,

and appropriate

this

waste

clothes,

and that a part of

for the purchase of so-called trim-

is

mings, which seldom improve the appearance of

the wearer.

The

car-riding habit

is

another source of petty

Thousands of people ride instead

of saving money and aiding health by walking. A
extravagance.

rain-coat, a pair of water-proof shoes or rubber

and an umbrella or rain-shedding hat, are

Unless you are
physically unable to walk, walk all you can, walk
boots,

money-savers and health-makers.

for the sake of your health and for the saving of

money.
I

am

not asking any one to

live in

a hermit's

house, for I believe in entertainment.

theatre

is

an educational

theatre habit

is

extravagances.

institution,

The good
but the

responsible for a proportion of our

Theatre-going has a

tail to it,

cost of the ticket being but a part of

it.

the

It

is

often connected with ice cream and suppers, or

boxes of candy, and

calls for additional clothes.

In every large city there are maintained stock

company play-houses, where

the best of plays, wel?

acted, are presented twice daily,

are low.

Many

and the prices

a student of the drama considers

these theatres far

more educational and

[78]

beneficial

How

Save Money

to

than are those devoted to bright

stars, shining in

They may

a firmament of supporting darkness.

not properly represent the playwright, because

the star usually takes the bulk of the money, and

the

company may be

The

hired like cattle.

price

of a good seat in an expensive theatre will cover

the cost of four good ones in the stock

play-house.

am

not, however, asking

company
you never

to see a great play acted by a brilliant star, but

you do not need to see half as many of them as
you think you do. Theatre money is not absolutely
essential, and there should not be theatre money
to the exclusion of money for real necessities.

The dining-out tendency is to be deplored.

many times more than it is worth. The

costs

pensive dinner

is

not nutritious.

runner of dissipation.
extravagance.
lieving that

helps

you

way.

It

Do

is

the fore-

It leads to every

form of

not deceive yourself into be-

your presence

into society, for

is

It

It

ex-

in a fashionable cafe

it

the other way.

has no tendency that

The man you work

for has no respect for you, because he knows

cannot afford to dine

in

expensive places.

you

He

upon you as a fool, because you are a fool.

Turtle soup and terrapin, champagne and mixed
looks

drinks, are never near the door which opens into

good
in

society.
The show-off dinner shows you off
way you do not realize. I am not referring

[74]

Petty Eoctravagances
to an occasional evening at a restaurant or hotel,

where good food

is

served at reasonable prices, be-

cause the stomach, as well as the mind, needs an

occasional change

but extravagant eating

bly extravagant when

dou-

is

affects both the health

it

and

the pocket-book

Smoking has become

by

so

very

so general, and

many high-grade
difficult

Lo

is

practised

people, that the subject

is

approach without giving the ap-

pearance of prejudice.

The statement may be

made, how^ever, that ninety per cent of habitual

smokers would,

if

placed under oath, say that they

wished they had never begun the habit.

There are

two kinds of smokers, the extravagant smoker, and

the one

who does not expend much money

for his

tobacco.

Whether or not smoking is to be condemned is

a question which each one must settle for himself,
but extravagant or excessive smoking
excuse.

Not one smoker

difference between a

in a million

is

can

without
tell

the

good cigar and the very ex-

He

buys his cigars by price, not to

There is very little reason for
smoking a cigar which retails for more than ten
pensive one.
suit

his

The

cents.
is

taste.

quality of cigars above this price

largely confined to the name.

If

you are bound

a good pipe

habit,

to smoke, cultivate the pipe

costs very little,

[75]

and

first-

How
class tobacco

to

Save Money

to

You

not expensive.

is

are not

smoke as much with a pipe as with a

healthiest pipe to use

is

one that

is

likeljr

cigar.

The

absorbent, like

the old-fashioned corn-cob, which costs five cents

or

less,

and which may be thrown away every few

days.
It

a significant fact that a proportion,

is

an'd,

perhaps, a large one, of professional men and

brain-workers

who smoke, prefer

the pipe to the

Then, smoking a pipe eliminates treating,

cigar.

and treating

is

responsible for part of the expense

of cigar smoking.

you ask me for advice about smoking, I would

if you will smoke anyway, cultivate the pipe habit, unless you are financially able to smoke good cigars without feeling the
If

say do not smoke; but

cost.

Gum
There

is

chewing

is

another petty extravagance.

absolutely no excuse for

I believe, contribute one dot to

health.

harm; but
very

it is

it.

True,

disagreeable

to

Habitual candy eating

health, but

it is

it

may

not do any

an expensive habit and one which

others.

cheapens the person who does

It does not,

I do not think that a reputable physician

would recommend

is

it.

good digestion or

is

It

certainly

it.

not only injurious to

an extravagance without excuse.

moderate amount of good candy does not

jure the digestion and

is

in-

a source of satisfaction,

[761

Petty Extravagances
and
as

would not bar

it

out, but the eating of candy,

usually taken,

it is

is

absolutely injurious

and

altogether too expensive to be justifiable.

Trying

to

to sense

make a show,

in other chapters,

and economy.

It accomplishes nothing,

except to make a fool of

makes no

I have spoken of this

one of the greatest menaces

is

difference whether

practitioner.

its

It

confined to the

it is

multi-millionaire, to the merchant, to the housewife, or to the shop-girl, it

and

of vulgarity

social

is

the personification

idiocy.

It

everything low and contemptible.

for

It

much extravagance, and never

is

stands

for

responsible

gives

any one

a position in any society, no, not even in the lowest,

for the

show-man or the show-woman, be-

decked with real or paste diamonds, has no respect

for others of his or her kind.

The

desire to

wear jewelry of any kind, espe-

cially expensive jewelry, could

not exist in true

civilization.

know that I am treading upon dangerous

ground, because some men, and most women, say

that they love jewelry for art's sake, and believe
that their admiration
it

here only as

The

genuine.

is

it affects

I will speak of

the moderate pocket-book.

and other expensive selfdecorations, are good investments is based upon a

wrong standard.
idea that diamonds,

The

love of expensive jewelry has impoverished

[77]

How
many a woman,

to

Save Money

and has done worse for her.

become unattractive because of the too many rings worn upon its fingers.
Many a poor clerk has purchased a watch altoyes,

Many a beautiful hand has

The money has

gether too expensive for him.

Thousands
young men have gone without proper under-

gone into the case, not into the works.

of

might accumulate

they

clothing

that

money

buy a hundred-dollar ring

to

sufficient

for a ten-dol-

lar girl.

Right here may I not speak of the bride's trousseau, which usually costs three times more than
the bride's parents can afford?
ciple of it
in

is

wrong.

extravagance.

The very

prin-

It enables the wife to begin

It sets the

wrong pace

at the

start.

Expensive wedding tours, by those who can

hardly afford local car-fare, frequently leave a

mark which

is

never eradicated.

In closing this important chapter

let

me not

leave the reader with the impression that I would

take from him

many

of the

little

pleasures of

life,

those inexpensive things which cast a glow upon

our everyday gloom, and which make for individual

and

general

happiness.

have

simply

attempted to warn him against any expenditure

he cannot afford, and to show him that the
music of true economy and genuine happiness

iliat

never comes from the jingling of coin.

[78]

Dress

CHAPTER VIII
DRESS
chapter entitled " Petty Extravathe
gances " I have spoken of dress, but it seems

IN

advisable to consider it by itself, for extravagant

and inappropriate dressing is very close to the

principal source of failure.

I
in

am

khaki clothes, or

ually burlaps

and

that

were

if

man to
any woman

not asking any

this

calico,

dress habitually
to

wear contin-

although I must admit

common custom, most

of

us would be happier, healthier, and better.

The

habit of adorning the body appears to

have started with the pre-historic savage.

first

The

thing he did, after he knew enough to do

anything, was to decorate his body, either with

paint or clothes.

This continued

in various stages

was placed upon the throne,

and business, always selfish and shrewd, saw in
dress its most magnificent money-making opporuntil commercialism

tunity.

It found willing devotees.

To-day a large proportion of the manufacturing and retail business of the world
fined to the

making and

is

con-

selling of outer clothes.

Fully one-half of the advertisements, which ap-

[79]

How
pear

in

to

Save Money

the daily newspapers, and one-quarter

of those in the magazines, exploit the outer gar-

ments of men and women and those things which

stand for appearance and show, and not for comfort and necessity.

At a
ties

recent World's Exposition, the authori-

found

it

necessary to place special police sur-

around an exhibition of fashion, which

protection was not needed for any other exhibit
veillance

on the grounds.

Crowds are seldom found in front of the showwindow presenting necessary underwear, or
clothes for service and comfort; but are found
gazing at the commercial display of hats and expensive outer

garments, which are intended to

adorn both men and women, especially the

The

tendency, and I

may

latter.

say, the almost in-

sane desire to look well on the outside, or to look

better than our neighbors,

is

half of all extravagance,

responsible for about

and for hundreds of

thousands of failures.

The

criterion of dress

but a show of expense.

is

not appropriateness,

It has little to

comfort or with attractiveness.

as, or better than,

To

our neighbors,

is

do with

dress as well

a deplorable

ambition, which insures failure, and which

is

re-

sponsible for over-work, the extravagance of overdressing,

and the inappropriate decoration of our

[80]

Dress
from our bodies to our houses. It is
without excuse, and is often criminally wrong,
and the cause of half of our downfalls.
outsides,

In the

first

place,

it

is

foolish, because it does

The

not accomplish anything.

over-dressed per-

son has no respect for one of her kind.

The
most extravagantly dressed people cannot cover
up the size of their incomes. Folk know what

they are worth, whether or not they buy their

for

clothes

cash or on instalments, whether or

not they pay their

whether or not they can

bills,

afford to dress as they do.

If they over-dress,

or dress beyond their means, the people they intend

to impress look

upon them with

half of these folk

may

scorn, although

be as foolish and do the

same thing.
It

is

a fact that the best people, and often the

richest people, dress the simplest, although

unfortunately true that

of

their

is

some multi-millionaires

are shoddy in appearance and

displays

it

money

as

make

do

the

as vulgar

genuinely

shoddy.

Decent people,

intelligent people,

and

well-to-

do people are not addicted to vulgar or extravagant display. Expensive clothes, worn especially

by those of moderate means, are vulgar and showlack of character and dishonesty on the part of the
wearer.

[81]

How
Over-dressing

to

Save Money

to-day

is

often

the

cause

of

poverty to-morrow.
Unless your income
expensive

clothes,

in

is

large,

justice

you cannot have

yourself, your

to

family, your business, and your future.

If

you would save money, protect

command

yourself,

the respect of truly respectable

and

men

and women, dress within your means, dress modand inexpensively, and remember that the

erately

clothes which look well need not be those which

cost the most.

Any attempt on your part to dress beyond

your means, or to use yourself as a frame for the
display of fashion, reacts against you and does
not pay when viewed from any standpoint.

This subject is again spoken of in the chapentitled " Extravagance," " Living Beyond

ters

Our Means," and " Petty Extravagances."

[82]


Taking Advice

CHAPTER IX
TAKING ADVICE

IN

the unabridged catalogue of everyday

life,

probably nothing occupies a more conspicuous

or voluminous space than that of advice-asking

with or without advice-taking, particularly by

would-be investors, and others, who have small

sums of money waiting for proper placing.
It has
is

been

said

worth just what

and that

that something-for-nothing
is

paid for

free advice belongs

for-nothing class.

As a matter

nothing,

it,

to the something-

of fact, this popu-

lar notion or estimate of the value of advice

is

far removed from truth.

Advice

one of the greatest of business and

is

social commodities.

To condemn
is

much bad

as

it

advice, as a whole, because there

advice in circulation,

is

as foolish

would be to object to bread-eating because

some bread

is

sour.

Only the fool is sufficient unto himself. The

wise and successful man never settles an important question by himself alone, whether the matHis
ter be of investment or of other purport.
accomplishments are due to his composite qual-

[83]

How
ities,

Save Money

to

to his ability to combine

He

with what others know.

what he knows

reserves for himself

the right to throw the casting vote, but he never

does

until he has sifted conditions

it

through the

minds of others.
anything more than ordi-

It is axiomatic that

nary success
ability to

due

is

know what

to

inclusiveness,

to

the

others know, or rather, to

use what others know.

Do

not misunderstand me.

say that the

man

He

himself.

thinking

is

The volume

of

his

self-

proportionate to that of his action

profitable result.

every standpoint,

selfishness, and safety,

and followed, to some

intelligence

to

of success does not think for

does.

and to the extent of the

From

mean

I do not

is

from that of

advice

policy,

should be sought

extent, at least, provided

in evidence at every stage.

In these rapid and strenuous times, things have

become
ists,

specialized,

too much

the all-round

and are managed by

so, I think,

man

because

out of business.

as this condition maintains, we, too,

ize to

it

special-

has forced

But
must

so long
special-

a greater extent than was necessary long

we must know one thing much better

and realize that others know other
things better than we do.
While none of us are infallible and while
[84]
ago, and

than

all others,

Taking Advice
error

an honest, con-

inevitable, the advice of

is

servative, successful

banker

would-be investor, than

is

worth more to the

the composite opinion

is

of a hundred college presidents,

number

tiply the

you

of college presidents,

The lawyer may be

be the minister, but

conscientious,

every reason

you

will.

and so may

they know the practice of

if

their professions as they should

is

may mul-

if

why they would

know

it,

there

be poor and in-

accurate weighers of financial things.

I

am

ciples,

speaking, of course, upon general prin-

because

financiers,

many

professional

men are good

but professional men are, as a

competent to travel very

rule, in-

from theoretical

far

fields.

Experience counts for as much as ability does,

and men out of business, whatever may be their

natural abilities, are too far from business to
manipulate business.

No

small investor, or investor of any size, for

that matter, should place his

tion

without

obtaining

money

advice

any direcfrom two or

in

more persons competent to weigh financial values.

Let us suppose, for example, that a young man
can

save

twenty-five

dollars

twenty-five dollars, small as

month.

it is, is

This

more to him

than are twenty-five thousand dollars to a man

of extensive property.

It

is

[85]

his

duty to place

it

How
at the

imum

Much
he

minimum

to

of risk, to secure for

He

of security.

he

as

Save Money

desires

high

rate

should not take the chances

accompany large

profits.

opportunity, which

it

max-

the

cannot aiford to speculate.

may

He

of

interest,

which usually

hears of a certain

Even

be industrial stock.

though he may be acquainted with the concern,

and personally know all of its officials, he should
thoroughly investigate what

is

back of the stock,

own opinion to count if it

cannot be substantiated by the opinion of others.
The easiest and best way for him to go at it, is
to consult with conservative and able men, who are
in a position to know whether or not this stock
is worth buying.
He should not depend upon the
advice of any one man, no matter how reliable
refusing to allow his

man may be. We are all

and many a man who is fair up
that

be the unfairest of

all.

We

subject to bias,
to his light,

may

are children, or men,

of circumstances; we cannot follow, with safety,

the road staked out by ourselves, or by any one
individual.

to steer by.

No one man ever made a chart

No one man by himself ever

safe

con-

structed an engine that was worth the cost of set-

ting up.

No

one

man

ever did anything, or

anything, wholly by himself alone.

There

such thing as individual originality in

lutely

pure

state.

Success

[86]

is

its

knew
is

no

abso-

due to adding to

Taking Advice
the

little

Safety

is

If the

we know, the much that others know.

vested in the composite.

men

visited

by the young man do not

know anything about

investments, they can re-

fer him, undoubtedly, to others

the investment

is

worth while.

who do know

if

If he cannot find

at least two reliable and conservative men,

who

have no interest in the stock mentioned, to advise

him to purchase

it,

he had better

let it severely

alone.

I think one

may

establish an invariable rule,

subject to no exception, that stock, or any other

form of security,
is

unqualifiedly

is

not reasonably safe, unless

it

recommended by as many as two

honest and conservative

business

men

familiar

with investment matters.

In the interest of safety, I would advise the
small investor to keep

vestment, even
it, if

if

away from any form

of in-

a dozen business men recommend

two or three equally good business men con-

demn it.
The man with a

small income had better lean,

and lean heavily, towards the

side of over-care-

fulness.

Most emphatically would

I advise

the small

investor to place no dependence whatever in

any

statement made by any person interested in the

stock for sale, unless such claim

187]

is

too reasonable

How

to

Save Money

to admit of suspicion, or

by

is

backed up and endorsed

outsiders.

There are three kinds of investments, the

the reasonably safe, and what

may

commercially,

safe.

nothing
word.

absolutely

as

absolute, but I will not

is

The

risky,

be considered,

Of

course,

change the

small investor, the wage-earner, and

salary-receiver have no business to consider other

than the

This class of investment has the

last.

support of conservative and able business men

and
not

The thing of unknown value is

have much value. It is pretty hard

financiers.
likely to

to keep a good thing down, and an investment

worth while

is

not kept under a business bushel,

but the light of

The

it

shines to the world.

best advisers

upon investments

are, as a

and other high oflScials, representThey are not

and banking houses.
speculators, they hold their positions on account
rule, presidents

ing banks

of their conservatism and extreme caution.

They

are not interested in other than clean and safe

securities.

But

They

are not likely to be biassed.

would not advise the small investor to

trust any one of them implicitly, because that
particular one may be prejudiced from self-inI

terest,

or from

infallible.

It

is

other motives,

and no one

is

better, therefore, to seek the ad-

vice of several of these men.

[88

If they agree, he

Taking Advice

may

feel safe.

If they do not, he

had better con-

sider something else.

Advice then,

if

it

of the right kind,

is

To

importance, and of vital consequence.

to

ask

it,

or accept

it,

all

reliability.

the losses which have

curred

upon small investors, would not have

if they had obtained good advice and

lowed

it.

fallen

of

shows pronounced pig-

headedness and a tremendous lack of

Ninety per cent of

is

refuse

All of our mistakes and losses are not

ocfol-

due,

necessarily, to personal inability or ignorance, but

to that sort of unheroic daring which seems to

order us to do what we please, to enter a blind

pool with eyes covered and with ears closed.

He who knows

it all,

knows nothing.

knows how

little

dividual

weak, the composite

is

he knows, knows much.

[89]

is

strong.

He who
The

in-

How

to

Save Money

CHAPTER X
LOANING TO FRIENDS

WOULD not adulterate, by even a microscopic

I

drop,

the

milk

of

human

We

kindness.

should help each other, for the more we help each

other, the

more we help

Reciprocity

ourselves.

is

one of the great elements of success; without

it

nothing

is

possible, save the

product of

selfish-

and the results of selfishness and avarice

should have no place in human affairs.
Things, at their best, are hard to bear, and
most of us are straining our bodies and minds.
Perfection and certainty do not exist in this
world.
If we would do anything, we must will-

ness,

ingly take reasonable chances.

is

to

To

do otherwise,

do nothing.

Many

man

obtained his profitable start in

through the kindness of a friend, who loaned

him money, or in some other way assisted him at
life

critical period in his career,

and so enabled him

to carry his load over a dead centre.

No man

with a heart in him, or with a nor-

mal amount of sense, would condemn the loaning of money to friends, or would he make any
other rigid rule against helping others.

[90]

The

es-

Loaning

Friends

to

tablishment of such a law would bolt the

of love,

would

even the beast

life oiit

lower us below the animal, for

is

generous.

judgment must be

Here, as in

exercised.

It

all else,

better

is

to

be generous than to practise the opposite, but

it

as

is

far better to be fair to yourself, as well

to

always

others,

generosity

considers

remembering

the

giver

as

that

true
the

as

well

receiver.

But

promiscuous

the

who are

friends,

carious, unfair,

loaning

of

and ungenerous, and

to injure the receiver as the giver.

financial investment,

sidered.

ness,

It

is

money

financially embarrassed,
is

is

to

pre-

as likely

It is not a

and should not be so con-

an accommodation, a thing of kind-

a thing to be done, or not to be done, as

conditions justify.

In making the decision, do

not allow your generosity to get the better of

your judgment, or your judgment to

your generosity.

selfishly

influence

Your

friend comes to

dred dollars.

you

You must

to

borrow one hun-

consider, first, whether

or not you can afford to give him the money,

whether or not you can take the ordinary or extraordinary chance in justice to yourself and your
family.

do

this,

security

If

you decide that you cannot afford

then you should not loan the money.

you have may be

[91]

limited

to the

to

The
good

How

to

Save Money

the borrower

is

If you can loan this

you can afford to give it, and
deserving, by all means accom-

modate him.

If,

on the other hand, the borrower

intention of the borrower.

money, or rather,

is

if

not deserving, refuse him whether or not you

can stand the

If he

loss.

is

deserving, then

it is

how great a sacrifice you must make

to accommodate him. At times you would be justified in making a great sacrifice.
At other times
any sacrifice would be wrong.
question of

It

is

undoubtedly true that the majority of

financially embarrassed people do not deserve consideration.

They

are in their present deplorable

condition because they were unwilling to save, and

refused to

make reasonable

sacrifices, and,

as a

rule,

they are without good judgment and have

little

moral stamina.

They would rather borrow

They would rather

than make any effort to earn.

do what amounts to stealing than to save money.

They would work harder

to

borrow a dollar than

they would labor to earn two dollars.

They

are

willing that their friends should take the chances.

They would pay

for

them to do

their bills

so,

if it

were convenient

but they would make no effort

These men deserve no

and only morbid sentiment would suggest that any one help them, unless the aid goes
to innocent members of their families, who would
to

meet an obligation.

assistance,

[92]

Loaning
hard privation

suffer

Friends

to

outside aid was not forth-

if

coming.

One would be

justified

if his

other way.

The loan,
member of

to the head

There

helping even

in

then,

is

to the family, not

it.

a class of borrower, who

is

the

family cannot be assisted in any

spendthrift,

is

in des-

perate straits through no fault of his own.

He

is

thoroughly honest and deserves to be considered.

He
is

is

a hard worker, would save

He

not extravagant.

the

if

intends, always, to return

money he has borrowed; he

sacrifice to

ance,

do

This

so.

and the lender

he could, and

man

is

is

will

make any

deserving of assist-

justified in aiding

him,

provided he can do so without undue sacrifice;

and sometimes he should make even more than

ordinary sacrifice for his friend in trouble.

Here
is

is

where human kindness comes

where we are justified

for our friends.

unless

it

in.

Here

in sacrificing ourselves

The man who

will

not do

this,

causes hardships which he has no right

to sustain,

is

unmanly, ungenerous, and a poor

citizen.

Another
for

class of

business

borrowers would obtain money

purposes,

not

because

they

are

financially embarrassed, but because they desire to

increase their business or to do

equally legitimate.

something

else

But the man of small income

[93

Hoic

Money

to Sa-ce

should not consider them as investment propositions, even

These

interest.
reliable,

though :hty oner an exorbitant rate

can

r/.en.

ob-a:::

if

of

thoroughly honest and

-onev from

the bank, or from

professional rr.cr.ry-ler.ders. or bv furr.ishing business or other secur::v.

those who can

vrr.:ch

may

In loaning m.oney, as well as

h: dt^ing

anything

one should consider oneself as m.uch as one

else,

considers the borrower.

for a
his

be acceptable to

aS'ord to t^ake speculative chances.

man

money

feels

at the

that

1'.

of responsibhity

it is

his

fellow

unfair and

is

wrong

and fannly to throw

who

is

duty to do

down, unless he
or, that

so.

by

so

doing, he will all the innccen^ and dependent, or

reasonably

is

that

sure

he

w^^i

get

his

money

back.

Most

who have eaten both

n'.en.

pie of hfe.

the bread and

and have taken no thought of to-m^or-

row, expect the ntan who has earned the right to

eat pie, by getting along whhtut

it.

the bread and pie with the fellow

to share

both

who does not

deserve either,

To sum up:
of moderate

The

inccn-.e.

man
money as

small investor, or the

sh :uld never loan

an investment w::h:'Ut security,

wants to

If he

help a friend, he shtuld place his friend's necessities

and

his

own

side

by

side.

If

his

desen-es help, or his farnilv are in need,

:94"i

it

friend
is

]u.5-

Loaning
tifiable to lend

to Friends

him the money, provided the lender

can afford to give

it,

or

is

able to sustain the loss.

This loaning of money

friendship,
tion.

upon

and

is

is

often a question of

not usually a business proposi-

done thoughtlessly or

It should never be

the spur of the moment.

The would-be bor-

rower and the lender should talk the matter over,

each should be frank with the other, and aid
should be given when

it is

deserved and the helper

can afford to help.

[95]

How

to

Save Money

CHAPTER XI
TAKING SPECULATIVE CHANCES

THE

speculator

is

nothing more nor

than a

less

financial gambler, although all speculation

element of chance must accompany

tion,

and

is

specula-

Opportunity for risk

a part of the making of success, and

is

accompanies

There

all

not limited, by any means, to purely

is

speculative manipulators.

and chance

is

But, nevertheless, the

not necessarily dishonest.

all

business-doing.

nothing sure in this world, in business

or out of it, and some risk must be taken by everybody who would accomplish anything.

There

is

right speculation and

tion; the difference

degree ; and
nitely,

it is

is

wrong specula-

somewhat a question of

extremely

difficult to trace, defi-

the line between what seems to be pre-

eminently right and what would appear to be

essentially wrong.

Commercially speaking, the speculator

doer of regular business

standard goods that he

may

is

not a

he does not obtain

sell

them at a

profit

he deals more in chances and takes large risks and

;

he succeeds,

if

the price he receives

an average, than the price he pays.

[96]

is

larger, on

In the trans-

Taking Speculative Chances

action of his business the element of chance

is

more than normal, and there is a larger opportunity for loss, and a greater one for unusual profit,
than would be likely to occur in the buying and
selling of ordinary commodities.

Whether or not
defined,

is

or business

there

is

wrong from

man

the moralist, no

chances,

speculation, as

right or

right

commonly

it is

the standpoint of

of small income has a moral

take

to

so-called

to place himself in

more than common

speculative

a position where

risk.

To do

unfair to himself and to his family, and

is

so

is

pretty

sure to result in complete financial breakdown.

Speculation
of

it,

who

is

or to lose, and
loss,

for those

who make a business

game to win

are willing to play the

looking at

who are
it

financially able to sustain

as inevitable, as a natural con-

sequence of speculation, feeling that the balancesheet at the end of the year will

but

all

the time

show some

profit,

recognizing the possibility of

complete failure.

These men train themselves for their work, they

make a

business of taking chances.

succeed; most of them

if

they

tify

all

fail in

Some of them
But even

the end.

succeeded, their success would not jus-

any one outside of

their kind in taking specu-

lative chances.

While the trained speculator may win, he who

[97]

How

to

Save Money

does not understand speculation, who

up

to

the

it,

love

is

of

is

absolutely sure of failure.

speculation

not keyed

Probably

with extravagance,

is,

responsible for ninety per cent of loss.

Keep out of

maximum

risk,

risk, unless

Refuse to take the

speculation.

or even more than the

minimum

work and can

and
you are a married man, your

you are trained

in the

meet disaster as calmly as you would success

remember

that, if

willingness to take speculative chances cannot be

taken as an excuse for any action which

to bring suffering
It

is

upon your

is

likely

family.

questionable whether or not you have a

right to injure yourself, but no one will justify

you

in

doing anything which causes the innocent

to suffer with you.

Being fair to yourself is not enough. You

must be fair to those dependent upon you.
You cannot be sure, but you can be reasonably
so, and anything less than the reasonable is
wrong.

[98]

The Savings Bank

CHAPTER XII
THE SAVINGS BANK

HE

rvy
^

savings bank,
the

called,

as

or,

for

institution

sometimes

is

it

savings,

is

repository for money, authorized by, and organized under, special State

banking laws, and

it

is

not under the jurisdiction of the Federal Government.

Many

and execute

of the States have enacted

the most strenuous regulations, which place their

banks under

savings

compelling them

the

supervision,

strictest

to conduct their business, and

particularly the investment side of

it,

in the

most

conservative manner, that the risk of failure or

loss

may

be reduced to the minimum.

These banking laws, when consistently complied

with,

and

ternity

it

to the credit of the savings

may

bank

fra-

be said that few depart from them,

do not permit

the

bank to

invest the depositors'

money except for the purchase of the highest

grade of bonds, for the loaning of money on mortgages of the better
real estate.

class,

and

in the

ownership of

In the States where the laws are

particularly strict, the bank can purchase only

preferred bonds and other high-grade securities,

[99]

How
and

is

Save Money

to

not permitted to loan upon real estate more

than sixty per cent of the assessed or real valuation.

Most
sibly

of the States have done all that they pos-

can do to safeguard the depositors' money,

the legislatures realizing that the failure of a savings

bank means

loss to the people

who can

least

afford to lose.

The

savings

bank,

then,

becomes

public

charge, and offers every reason for every kind of

legislative safeguard.

The

savings bank

governed or managed by

is

a board of trustees, no member of which

is

allowed

any salary or emolument for his services.

The board elects a president, who usually draws
no salary, but who may do so if he is active in the
management of the bank; and a treasurer, who
acts as executive officer, and who appoints the
necessary clerks and assistants, none of whom are
paid more than reasonable salaries, except in some
to receive

places where the laws are not strictly enforced

and the management

is

neither conservative nor

economical.

The good

savings bank

thropic institution,
strongest,

is,

in reality, a philan-

under the management of the

most conservative, must

highest grade of

men

in the

reliable

and

community, who

vol-

untarily give their services for the benefit of the

[

100

The Savings Bank

people, and because the position of trustee

is

highly honorable one.

Other savings banks, legally operated

States, while depositories for money,

some

in

and while

they render, apparently, the same service to deposare money-making institutions, established
and maintained for the benefit of the stockholders.
itors,

They

are usually connected with trust companies,

and are conducted

They

as separate departments.

are not, as a rule, as conservatively managed, or

as safe, as are the regular mutual savings banks,

which are not supposed to be money-makers.

All savings banks are subject to State inspection, the severity of

which

is

dependent upon the

strenuosity of the laws controlling the banks.

The

large majority of savings banks are finan-

cially sound, conservative, economical,

managed,
assured of what
fully

and
is

their

and care-

depositors

may

be

very close to absolute security.

But there are scattered throughout the country

quite a number of small and badly managed banks,
usually controlled by one man, or a combination
of men, who run the banks for their own profit,
and who loan the money, either to themselves
indirectly, or to others who are in league with
In outward appearance, these banks may
show every indication of solidity, and only careful

them.

investigation will locate

[

101

their
]

weakness.

They

How

Save Money

to

are continuously failing, and sometimes the depositor loses all his

from

money; but usually he

more than the current

jVIany of these banks offer

rate of interest, using

it

receives

per cent of his deposit.

fifty to seventy-five

as a bait to attract the

depositor.
It is possible that

a well-managed savings bank,

under certain local conditions, can pay as much

no conservative business man

would recommend such a bank, unless he was
thoroughly familiar with all that is going on inas five per cent, but

side of

it.

Upon

general principles, I would not advise

any one to deposit money in any savings bank

paying more than four per cent. Money is worth
less to-day than it used to be ; and because money
is cheap, interest is low.
Loans are frequently
made at three per cent, and some bonds do not
pay more than two per cent net. Good four per
cent bonds yield less than four per cent, unless

they are purchased at par.

The
loan

first-class savings

money except on

its

will it

thing

bank cannot, and

purchase any questionable security, or anyof

speculative

Consequently,

value.

cannot easily obtain more than

on

its

will not,

gilt-edged securities, nor

investments, that

is

five

to say,

not possibly earn more than

[102]

five

it

per cent net

its

money can-

per cent, on an

The Savings Bank

average, and

earn

likely to

it is

less.

From

these

earnings must be subtracted the expense of run-

nmg

the bank.

It

obvious,

is

managed

depositors

its

although

then,

that

no

conservatively

pay

institution for savings can afford to

it

much more than four per

may

cent,

occasionally be permitted to give

an extra dividend.
Beware, then, of the bank paying more than a

normal rate of interest, which should not be far

from four per cent.
It is well to give

your local bank the preference,

but do not do so unless you are sure of

ability

and strength.

by

Most savings banks

its reli-

receive

and I would advise the use of

banks located in States where the banking laws are
strictly maintained, unless the local bank has a
deposits

mail,

high to be questioned.

reputation too

banks

will

few

not receive deposits from those outside

of their territory, but the majority of them do

not make this restriction.

The

frequent

failure

savings

of

banks

has

naturally prejudiced

many

but this prejudice

unfair to the savings banks

in

general.

is

people against them,

Practically all of the

confined to small institutions

failures

aged by incompetent or dishonest men.

sionally a small

bank goes to
[103]

are

and to those manOcca-

pieces on account of

How

Save Money

to

defalcation, because the business done

by

it is

not

large enough to sustain a considerable loss.

Defalcation on the part of the bank

always

inspection,

There

No

possible.

is

completely

any one

official will

officials is

regulation,

guard

against

Nor

or
it.

is it

know whether or not a

to

fall.

under severe temptation,

the

or

always opportunity for theft.

possible for

trusted

can

law,

Many an honest man,

may use the money of

bank for speculation, with a genuine intenit.

He fails, as most speculators

tion of returning

do, and, consequently, cannot return the money.

If the bank is small, the whole, or a
money comes out of the depositors.
It may seem hardly fair for me to

part, of the

discriminate

many of them
Rock of Gibraltar, and most
of them are managed by men whose integrity is far
But it is, nevertheless, true that
above par.
while human nature is weak, defalcation is always
against the small bank, because
are as solid as the

possible,

and the robbing of a small bank usually

wrecks the bank, while the same amount of money

taken from a large institution would not affect
the depositors.

It

treasurer, or other

make

false entries,

is

always

official,

possible

for the

of a small bank, to

and to cover up

his dishonesty

for an almost indefinite period, and, as he largely

controls the finances of the bank, he can easily
[

104

The Savings Bank

wreck

it

while no one

official

has the same oppor-

At

tunity in a larger bank.

most, he can steal

but a small sum compared with the total amount

of deposits.

defalcation of fifty thousand or

one hundred thousand dollars

may

ruin a small

savings bank, while a theft of the same size would

not

affect

trustees

large

bank.

Then,

everything to the treasurer.

leave

frequently,

do not exercise their prerogative, but

This gives

him the opportunity for embezzlement.

The

large bank, on the other hand,

is

officered

by many officials, and no one of them can get hold

of much of the money without the knowledge and
consent of others.

As

I have already said, there are several small

banks run wholly

or

officers,

in the interest of their trustees

and although none of these men may

be direct defaulters or embezzlers, they loan the

bank's money, either to themselves directly, or to

men they

are connected with, often taking unfair

and even criminal

go down.

risks.

Sooner or later the bank

will

Comparatively few large banks have

failed,

and

few of them have been affected by defalcation or

by occasional bad
enough to stand a
can sustain one

investments.

They

loss of reasonable size

many

are large

and they

times larger than that which

would wreck a small bank.

[105]

How

Save Money

to

I would advise no one to place

money

in

any

savings bank, except in those of national reputation, until he has investigated the standing of the

bank by making the most searching inquiries of

local bankers and reliable business men; and I
would further advise him to give the large bank
the preference, upon general principles.
If his local bank is small, and if it is not managed and officered by honest local business men, I
would advise him to deposit his money in some
larger savings bank, located elsewhere.

An

officer

of any national bank, or any bank

president, or the leading financier of the town,

can give him

It

all

the information he desires.

inquire of

well to

is

many an

honest

man

is

more than one, for

by special inter-

biassed

ests.

would be on the safest side, it would be

him to make inquiries outside of his town,
addressing them to the officials of some national
bank or savings bank of extensive reputation.
If one

well for

The fact that there are two or more thoroughly

good men on the board of trustees may not be
taken as evidence that the bank is sound, unless
these men take an active interest in the bank's
business. Many a good man allows himself to be
elected a trustee,
duties.

and gives no attention to his

is placed upon the board

Frequently he
r

106

The Savings Bank

His connection

wholly for the use of his name.

significance,

and

Persistent and careful inquiry will enable

any

with the bank, then, has

little

does not add to the bank's value.

one to get pretty close to the true condition of

the bank.

Better go too far with your inquiries than to

do otherwise.

Never deposit

any bank which

in

spoken of and which

is

is

not well

not supported by the care-

and conservative business men in the town.

The savings bank is obliged to make an annual
statement, and this statement is likely to be techful

nically true

but

it is

not, as a rule, intelligible to

Most reports read well upon

Unless you are familiar with finan-

other than experts.

their faces.
cial

matters, do not allow this report to influence

you for or against the bank, until you have shown

it to some one who understands it.
Be suspicious
office
which
places
its
furniture
among
of the bank
its assets, and which shows other weak collateral.
Keep away from the bank which lends more than
sixty per cent of the real value of the property

But if you are not able to weigh

values, you will have to depend largely

mortgaged.
financial

upon the standing and reputation

ers.

cial

If they are

men

of-

your advis-

of character and high finan-

standing, and are not speculators,

[

107

you are

How

Save Money

to

not likely to go far from right in taking their

advice.

The

savings bank

venient depository

may have

their

is

certainly the

for savings.

Its

most condepositors

money back when they want

although the bank

may

it,

require from thirty to

ninety days' notice of withdrawal of the entire

deposit.

This condition

is

seldom taken advan-

tage of by other than weak or small banking

The

tutions.

insti-

and larger savings banks

condition, and pay in full

first-class

invariably waive this

when requested, except in cases of a run on the

bank, and even then most sound banks do not
refuse to give the depositor his money when he
asks for

it.

The owner

of mortgages, stocks, bonds, and

real estate, although his

invested,

may

securely

not be able to unload, so to speak,

to obtain his cash without a long delay,

therefore, he

body,

may have

usually

to

pay something

broker,

obtaining his money.

is,

money may be

The

for

the

and,

to some-

privilege

of

savings bank deposit

on the other hand, available cash, and

is,

fur-

ther, interest-earning cash.

The

money when he
wants it from the savings bank may operate
against this form of deposit for those who have
fact that one can get his

an almost criminal desire to use their available

[108]

The Savings Bank

For

money.

reason,

this

it

may

be better for

money where they cannot get

it without much trouble and delay.
But I have
not much sympathy with this class of people,
anyway. They do not amount to anything, and I
am not in favor of establishing any method of
them to place

their

investment for their benefit.

The

savings bank deposit has another advan-

tage over other forms of investment because the

bank

is

willing to take small deposits, enabling

one to begin with a dollar, and to deposit systematically.

est

Each

dollar

draws the

full rate of inter-

from the beginning of each quarter.

Let us suppose, for exam.ple, that you can save

You can

a dollar a week.

deposit this dollar

every week in a savings bank, while you cannot

possibly invest

way.

it,

You may

dollar for dollar, in

keep

it

in the

bank

any other

until it reaches

a thousand dollars or more, or until you have

sufficient

money

to purchase a mortgage, a bond,

or other security, or you can open an account in

another bank,

if

your bank refuses to receive

over a thousand dollars from any one depositor.

If

you are

satisfied

with four per cent, and you

cannot get more than

five

degree of safety, you

may

money remain
ings banks.

in the

per cent with much

prefer to

let

your

bank, or to use several sav-

Thousands of wealthy people, who

[109]

How
know how

to

Save Money

to

money, u^e savings banks

invest

exclusively or partially, depositing even as

much

hundreds of thousands of dollars

them.

as

in

They receive, usually, four per cent, and their

money is secure, if they use good banks.
Some systematic savers and investors use savings banks as a legitimate make-shift.
As fast
as their accumulation reaches the proper size they

withdraw

it,

paying a

may

may

in

something

higher interest, which

may and

that they

little

not be done at a

invest

it

risk.

recommend to every one that he use the

savings bank at the start as the basic depository
for his savings, whether or not he passes his money
through the bank to something else. Further, I
would advise all who begin to save, not only to
use the savings bank, but to make their deposits
systematically and conscientiously, and never to
withdraw their funds for any other investment,
I would

unless they are sure that the security offered

as sound

Every

and as safe

as the

bank

is,

is

or nearly so.

one, unless he has accumulated consider-

able property, should

make

it

a point to deposit

something in the savings bank every week or

every month.

This saving, and systematic depositing, should

become a matter of

principle.

If the saver deter-

mines to save something at stated periods, he

riioi

The Savings Bank

should make a deposit on each day decided upon,
even though
this

it

be only a dollar.

To

break from

systematic saving rule interferes

with the

very principles of saving, economy, and protection.

Anything worth doing at all should be done

systematically.
Without system we do nothing
well, and mighty little at all.

He who
small the

systematically saves, no matter

amount may be that he puts

least, and

one good qualification, at

something

which

every

sensible

how

aside, has
is

business

doing

man

respects and will accept as substantial proof of

good character, faithfulness, stick-to-it-iveness,

and ability.
Even a weekly or monthly visit to the savings
bank makes for good, for the depositor comes face
to face with

men

of standing,

and often with men

of mark, and their acquaintance or friendship

worth cultivating.

The

depositor,

bank, gradually attracts

ically calls at the savings

the

attention

of

likely to

Many

bank

the

acquaintance, although

is

who period-

it

may

officials,

and

this

not be intimate,

is

be of some use to him.

a business

man

gives decided preference,

when engaging a clerk, to one who has a savings

bank deposit.
A savings bank book of deposit is a positive
[111]

How

It stands for

asset.
is

Save Money

to

more than

its

face value.

It

a book of recommendation as well as of deposit.

I

would advise every young person, and every

one of any age, who has not begun to save, to

make a savings bank

deposit to-day.

only a dollar at his disposal,

it is

If he has

a start in the

right direction, and the right start seldom ends

wrong place.
Take care of your book

at the

leave

it in

a bureau drawer.

deposit box,

of deposit.
If

Do

you have no safe

ask some friend of yours to take

care of your book for you.

If

it is

lost or stolen,

immediately notify the bank by telephone,

egraph, or mail.
the
is

not

It

is

tel-

quite difficult, however, for

wrong person to realize upon the book, but

him to obtain the money.

possible for

[112]

it

United States Government Bond

CHAPTER XIII
THE UNITED STATES GOVERNMENT BOND
HE United- States Government bond repre-

fTl
--

what may be considered as absolute

sents

security.

holder of

It
it

is

practically

impossible

money

to lose his

for the

as long as our

government remains intact and enjoys

a fair

degree of prosperity.
Theoretically speaking, the intrinsic value of
the bond

is

sible for it to

tically, it

not completely

drop below

its

fixed,

and

face value

remains firm and sound,

its

it

is

pos-

but, prac-

fluctuation

being limited mostly to the premium paid by

its

purchaser.

The government

can, of course, repudiate its

indebtedness, but this

something which never

is

has occurred, and there

not the slightest pos-

is

sibility of its occurrence.

Should the government

all

fail, it is

obvious that

forms of American securities would be value-

less

or close to worthless.

The United
always
thing

States Government

will be, the

which

may

bond

is,

and

standard investment, the one

be

considered

safe.

[ns]

superlatively

How
is

Save Money

to

The only

objection to investing in these bonds

that they

pay the lowest

rate of interest

upon

their face value, the purchaser being seldom able

to procure

mium.

them without the payment of a pre-

These bonds hardly ever reach the individ-

They are usually bought

by imderwriters, who bid for the entire issue, and
then job them out, so to speak, to individual
purchasers, who must pay a premium to obtain
ual purchaser at par.

them.

This lowers the net receivable rate of inter-

est.

There are two kinds of United States Governregistered and coupon.

ment bonds,

The

registered bond,

as

its

registered or recorded in the

chaser or owner.

If

it

is

name implies, is
name of its pur-

lost or destroyed the

will make good.

The coupon bond is payable

government
holder,

and

is

to

bearer

or

practically the same as a bank-bill,

except that interest

is

paid upon

tiable without registration.

If

it.

it is

It

is

lost it

nego-

cannot

Owners of coupon bonds should make

of the numbers and place it in
some secure place away from where the bonds are
kept. A knowledge of these numbers may assist
the owner in recovering them, if they should be
Coupon bonds should never be kept
lost or stolen.

be replaced.
a

memorandum

in

an ordinary

office

or house safe, which

[114]

may

not

United States Government Bond

give sufficient protection, but should be placed in

a safe deposit box or other secure receptacle.

I would not particularly advise the wage-earner

or salary-receiver to purchase United States Gov-

ernment bonds, or to consider them for investment purposes, and I say this knowing that these

maximum

bonds offer the very

of security.

The

fact that they cannot be had except at a proportionately high premium,

and that they pay the

lowest rate of interest,

is

my

advising against them, but be

I

would not take

kinds

stand

this

investment

of

although,

they

which pay a higher rate of

pays more
is

the

understood that

may

as

secure,

not be

so,

interest.

savings bank, for example, not only

interest,

the government

net,

it

there were not other

substantially

theoretically,

The strong

if

reason for here

interest

depositor puts

in.

but

is

practically as safe as

and the deposit in it is

being reckoned on what the
Further, there is no premium
itself,

condition.

While I

am

investment,
receiver,

thoroughly opposed to any form of

for

the

wage-earner

and

which presents more than the minimum

of risk, I see no reason

why he

should content

himself with so low a rate of interest as

by

the

salary-

government bond, when

same security

is

is

paid

practically the

obtainable with higher interest.

[115]

How
The province

to

Save Money

of the government

bond seems to

be principally for large investors, to those in

charge of trust estates of considerable

those

to

who

size,

and

desire to salt-down, so to speak,

may remain unmoand free from attention and care.

I would advise the small investor to get all he
can for his money, provided he does not take
large sums of money, which
lested

undue
est,

risk.

He may

obtain a fair rate of inter-

with substantial security, by depositing his

money

in a strong savings bank, or

by using other

conservative methods, which I have spoken of in

this

book, and which pay from three and one-half

to five per cent.

Let me say here, as I have said several times

in this book, that the

minimum

of risk accompanies

only investments paying not more than

five per
an occasional opportunity of six per
The line of safety may be drawn at five

cent, with
cent.

per cent, although there are a few investments

paying

six

per cent, which are reasonably

safe.

For the foregoing reasons only do I refuse

recommend in particular government bonds
those who can save but a little money.
However,

if

to

to

one desires to possess the feeling

which comes from absolute security, and wants to

have his money where he need never give it a
second thought, willing that

[116]

it

should earn the

United States Government

lowest rate of interest, he would

Bond

make no mistake

purchasing government bonds, preferably reg-

in

and placing them in a safe deposit

box, where robbery and loss appear to be imposistered bonds,

sible.

The owner

of the registered government bond

cannot possibly lose his property.

the coupon government

bond

the

safe

possibility

broken

of

his

is

The owner

of

subject only to

deposit

box being

something which has never occurred

into,

so far as I know.

But as there are so many other forms of investment practically as strong, although theoretically
weaker, and which pay a higher rate of interest,
the small investor can get along without hblding

United States Government bonds.

[117]

How

Save Money

to

CHAPTER XIV
THE STATE, MUNICIPAL, AND
TOWN BOND

PERHAPS

there

in

is

America a State,

or town free from indebtedness.

heard of

I have never

any one who

Money

it,

and

city,

If there

is,

know

of

I do not

has.

borrowed by States, municipalities, and

is

towns for various purposes and according to law,

usually in anticipation of taxes and to

pay cur-

rent expenses, and for the establishment of public

improvements,

like

Comparatively

water-works and sewers.

few

communities

could enjoy

any of the modern improvements or betterments,

if
the money for their construction was not
borrowed, either on notes signed by the proper
officials, or by the issue of bonds.
Very few
improvements are made without the issuing of
bonds, for most of the money obtained on notes
is

for current expenses.

The borrowing capacity

ipality, or

town

is

of any State, municby law; but the State

discretion, move the borrowing
limited

may

legally, at its

line

ahead, even near to the danger point, and

occasionally

The

it

allows

State borrows

it

to be passed.

money through
[1181

act of

its

State, Municipal,

Town Bond

by vote
and the town by vote of

legislature or assembly, the municipality

of its city government,

the town

subject in

itself,

all

cases to State law or

regulation.

When borrowing

is

done within the prescribed

limits of indebtedness, without special State con;

cession,

and by

legal act of the officials or voters,

the bonds issued are what

may

be considered close

to absolute security, and are to be recommended

to the small investor, and to others

who would

prefer a fair rate of interest with solid security.

These bonds pay a low rate of

exceeding

five

interest, never

per cent, and frequently as low as

four or three and one-half per cent, except where

the borrowing community

is

heavily in debt, which

condition raises the element of risk.

For example, the conservative, economically

managed city, with less than normal indebtedness,
can borrow money at a low rate of interest, even
at three and one-half or four per cent, and yet
sell

its

bonds above par, individuals or banking

houses buying the entire issue at a premium of

from one to even eight per cent.

Let us suppose that a conservative city desires
construct new water-works.
to
The city's
indebtedness
its

credit

is

the security

is

below the limit prescribed by law,

good,

it is

it offers is

progressive and growing,

ample, and there

[119]

is

a cer-

How

Save Money

to

tainty that both interest and principal will be

promptly paid.
Unless money

is

especially tight,

it

can borrow

at from three and one-half to four per cent;

erally for

less,

because

it

can dispose of

its

lit-

bonds

at a premium, a thousand-dollar bond selling for

from one thousand and ten dollars to occasionally

as much as one thousand and eighty dollars.
These bonds are usually sold to brokers, bankers,
and underwriters, who sell them to the public at
If the broker pays, say, one

a slight increase.

thousand and thirty dollars for a thousand-dollar

bond, he would probably

this

sell

bond at from

one thousand and thirty-five to one thousand and

forty dollars, or for more.

As a rule it is
from the town or
is

you are a

city, unless

or a member of a syndicate.
It

obtain a bond direct

difficult to

capitalist

obvious that a four per cent bond, sold at

a premium, does not pay four per cent net to

purchaser, who

may

its

not receive more than three

and one-half to three and seven-eighths per cent on

the purchase price.

The

intrinsic value of the

ent upon the length of time

bond
it

is

also depend-

runs, the thirty- or

forty-year bond being worth more than the ten-

year bond.

town borrowing
[120]

If the State, city, or

is

in a

State, Municipal,

Town Bond

good financial condition, and its bonds are legally

and properly issued, they may be considered as
offering a security practically as sound as that
presented by the United States Government bond.

The bonds

of communities of fair credit are

reasonably safe, but those carrying large indebtedness, which

must borrow by

the State, should be avoided

special permit of

by the small and

careful investor.

Upon

general principles

I would

the

advise

small investor to have nothing to do with a bond

paying over four per cent, unless a half dozen

good financiers, who are not interested in the
bonds in question, expressed emphatically the most
favorable opinion concerning them; but under no
circumstances would I advise the purchase of a

bond paying over

five

per cent, unless one

is

able

to take speculative chances.

Bear in mind that a bond cannot possibly pay

more than the rate of interest specified upon its
face.
it

If

it is

a four per cent bond, for example,

can never give

its

owner more than four per

cent, while a share of stock

may pay any

dividend

but the security offered by the average stock

far below that given

by

is

the average bond.

There are some disadvantages to investing

in

bonds
First, because of the low rate of interest paid;

[121]

How
but

this

to

Save Money

condition prevails with all safe invest-

ments and should not be considered an objection.

Secondly, because the selling value of bonds

may

fluctuate.

They may be worth more to-day

than to-morrow ; but when

this occurs, the fluctua-

tions are likely to be small,

although I have known

a high grade of city bond to drop six or seven

points in a year, not from the face value of the

it.
For
pay one thou-

bond, but from the premium paid on

example,

let

us suppose that you

sand and sixty dollars for a thousand-dollar bond.

more you canbond in the open market for more

than a thousand and ten or a thousand and twenty dollars.
If you are forced to sell, your loss
is considerable.
There is, however, a fair chance
that the premium will return to what you paid, or
You sustain no loss, then,
close to that figure.
slight
loss,
if you can afford to hold
or only a
I would advise you, however, not to
the bond.
purchase bonds at a high premium. Better wait
until the condition of the money market is such
It

possible that within a year or

is

not

sell

this

that safe bonds are selling nearer to par.

Your

tell you
what to purchase, but when
to purchase. Better keep your money in the savings bank until the bond market is low.

banker, or other financial adviser, will

what

to do, not only

Thirdly, the danger of losing a bond unless

[122]

it

Town Bond

State, Municipal,
is

box

registered; but a

vault

absolute

gives

a good safe deposit

in

The
but many

registered

security.

bonds are safer, of course,

prefer the

unregistered ones, because they are more negotiable

The

and can be sold with no formality.

fluctuation of first-class bonds

is

invaria-

money market, and

bly due to the condition of the

their holders are not likely to lose on them,

if

they purchased them at a fair premium and can

afford to hold them over a slump in the market.

The advantages
First,
ciers,

it

is

high-grade

investors

as

security.

of a good bond are

considered by

all

bankers,

pretty

offering

high-grade bond

for all savings banks and

is

first-class

finan-

and

conservative

close

to

absolute

a legal investment

is

looked upon as the

best form of security for a loan.

Secondly,
is

its

easy negotiability.

seldom worth

than

less

about as good as a bank

its

good bond

face value and

bill.

Any bank

is

will

gladly loan from eighty to ninety per cent of

its

bond as security. As a
matter of fact, the owner of a bond has what is
substantially a negotiable bank bill, yet paying
face value, holding the

a fair rate of interest.

There are on the market large quantities of

fraudulent, illegal, and worthless bonds, issued by
mushroom towns, and other communities, which
[

12S]

How

Save Money

to

are heavily in debt and without credit.

These

bonds are oifered by irresponsible brokers, and

pay a high rate of

usually promise to

They

interest.

are generally handsomely printed upon a

high grade of paper, and the face of them pre-

an

sents

these

Occasionally

appearance.

impressive

bad bonds are guaranteed

to

pay but a low

rate of interest, this being done to avert suspicion.

offer the very maximum of
many people look upon all bonds as safe.
This common belief enables dishonest brokers to

Because some bonds

security,

As a

dispose of worthless bonds.

rule,

do not

purchase bonds issued at distant places, because

it

may

value,

not be easy for you to ascertain their

and somewhat

difficult

to obtain

expert

opinion regarding them.

The majority

of banking houses and brokers

dealing in bonds are thoroughly reliable,

still

would not advise the small investor to place

implicit confidence in any one party, especially
in

any one

seller of

for himself.

He

bonds.

should investigate

up the financial
He may make inquiries of

It is easy to look

standing of a town.

the presidents and cashiers of two or three good

who would gladly impart the information

The value of good bonds is known to all
bankers and men of finance, residing in the combanks,

desired.

munity, especially to the bankers, for bonds are

[

124

Town Bond

State, Municipal,

a convenient and satisfactory form of collateral

at the banks.

To make

myself plain,

me

let

suppose,

for

example, that you think seriously of purchasing a

certain municipal bond.

advise

you

to call

Before doing

so, I

upon two or more

would

first-class

bankers, and ask their opinion regarding the security offered. If you are advised strongly by

all

of them to purchase the bonds, you can safely do

so.

If the opinion

is

not unanimous,

let

them

alone.

Bonds which pay exceeding four per cent do

not present the best security, although a few four

and one-half and five per cent bonds are reasonably safe. The community paying more than four
per cent for money is usually financially weak or
is

very much in debt.

Comparatively few high-grade bonds are more

than modestly advertised.
tised at

advise

which

all.

you
is

Upon

Some

are never adver-

general principles, I would

to have nothing to do with a

heavily advertised.

much publicity.
Remember that this book

bond

good bond does

not need

is

not intended for

speculators, or for financial gamblers,

men who

play with stocks and bonds as they do with cards,

to win or lose at the casting of the dice.

am

presenting facts and opinions, which I hope will

[125]

How

to

Save Money

be of service to the rank and

women

file

of

men and
many

of the great middle class, to the

thousands who have small incomes, and cannot

save, therefore, more than moderate sums, and
who should consider security of more consequence

than a high rate of

interest.

I do not propose to compare the good bond

with the savings bank, because the

first-class sav-

ings

bank

bond
bond

does, although the high-grade or gilt-edged

offers

as substantial security as the

than the average savings bank

Both the good bond and the thoroughly
secure savings bank pay about the same rate of
interest, and offer practically the same security.
I would
It is largely a question of preference.
is

safer

account.

advise the small investor to use both.

[120]

Bank Stock

CHAPTER XV
BANK STOCK

NATIONAL
sidered

bank stocks or shares are con-

high-class

value

their

securities,

being based upon the capital of the bank

the quality and quantity of the

itself,

business done,

and, further, upon the reliability and financial

standing of the directors and

National banks

fail,

officers.

but not often; and com-

paratively few which are officered by

men

money

of

and high standing meet with more than temporary

embarrassment.

The
sive

stock of the conservative, and yet progres-

and

well

managed national bank, may be

considered as giving pretty close to the

of safety.

Yet

subject to some fluctuations,

it is

and the holder of

it

maximum

cannot depend upon

remaining at any one price.

But

its

value

these fluctua-

tions are usually quite small, the stock remaining,

as a rule, at

the decline

its
is

standard valuation.
to be

likely

If

it

drops,

momentary, with a

quick return to the normal.

The purchaser

of national

bear in mind that he

the

amount

is

bank shares should

personally liable for twice

of his stock, should the

[

127

bank

suffer

How
financial

Save Money

to

embarrassment and not be able to meet

For example, let us suppose that

jou own one share of national bank stock, the
par value of which is one hundred dollars. The
bank fails, and there is not sufficient money to
pay its depositors. A depositor is a preferred
creditor, and he must be paid before any one else
its

obligations.

receives his

holder,

may

money.

Therefore, you, as a stock-

be assessed as

much

as the

par value

of your stock, in which case your loss would be

one hundred dollars plus what you paid for the

stock.

Many

a small investor has been ruined because

of the failure of the national

bank

in

which he

is

a stockholder.

This condition adds additional risk to national

bank

stock,

yet

it

comparatively small as a

is

matter of fact, because most national banks are

strong financially.

Before purchasing national bank stock

it

well to investigate the standing of the bank,

to ascertain the

market or

selling value of the

shares for the last ten to twenty years.

stock has shown

much

is

and

If the

fluctuation, better let

it

Then, you should consult, personally or by

mail, the officers of other banks and men of high
alone.

financial

reputation,

know about

the

who are

in

position

bank in question, or can

[128]

to

easily

Bank Stock
ascertain for

you various

facts relative to

stand-

its

ing.

Unless several reliable bank

recognized

mend

financiers,

will

the stock, you

officials,

or other

recom-

unqualifiedly

had better consider some

other form of investment.

The
it

is

national bank

solid,

is

a public institution.

and doing a good business,

tion in the financial world

will

have

If,

little difficulty in

about

it,

posi-

its

known, and you

well

getting at the facts.

on the other hand, you experience

in finding out
is

is

If

difficulty

the chances are that there

something wrong about the bank.

Comparatively few national bank stocks

may run

sell

at

many

times the

face value of the stock, the size of the

premium

par, and the premium

depending upon the

capitalization,

The
than

share-holder

five

reliability

and the
is

to

of the bank,

its

interest paid.

not likely to receive more

or six per cent for his investment, even

though the bank may pay double or treble that

sum on the par value of its stock.

The stock of a first-class national bank never
sells

at par,

and there are instances where

worth thirty times

face value.

its

Never buy a bank stock

par.

It

may

it is

selling for less

than

be safe, but not for you.

As a matter

of fact, good national

[

129]

bank stock

How
is

Save Money

to

not likely to be a much better paying invest-

ment than

is

a deposit in a good savings bank or

a good municipal bond.

While I have every respect for good national

bank stock, I do not especially recommend it to
wage-earners,

investment for
to

because

men

fluctuation,

it

with

carries

pay much more

does not

by savings banks, where

to fluctuation,
responsibility.

preeminently

is

of money,

is
it

an

somewhat subject
a liability, and

interest than that given

the deposit

is

not subject

and where the depositor has no

The security offered, however, by

a good national bank,

is

very much above that

given to the depositors of

many

savings banks,

which are virtually controlled by one man, and

which are too small to stand defalcation or

When

I refer to

good savings banks,

loss.

I have in

mind only those controlled by several men of high

and carrying so much money that
for them to be
it would be extremely difficult
standing,

affected

by dishonesty or other

disaster.

I need not discuss the stock of the state

and loan and trust company.

What

bank

I have said

about national bank stock applies virtually to

that of other banking iustitutions.

The reader

is

referred to the chapter entitled

" Keeping a Bank Account " for further information about business banks.
r

130

Investment Value of Stocks

CHAPTER XVI
THE INVESTMENT VALUE OF STOCKS
HAVE
I

attempted to cover in other chapters

the various kinds of stocks,

upon

particularly

buying.

the

and

I have dealt

speculative side of stock

In this chapter I shall try to treat,

briefly, stocks

as an investment for the

man

of

small income, the salary-receiver, and the wage-

any attempt

earner, without

them for

to consider

the speculator and capitalist.

It

is

obvious that the

man

of

little

present

money, and with small prospect of accumulating

more than a moderate sum, should consider safety

and security of far more importance than the
large profit which may be realized by the taking
of more than ordinary chances and by speculation.

share of stock

as a piece of

may

part of the ownership

example,

if

be untechnically described

paper representing a proportionate

company

of
is

at

for

incorporated for one

hundred thousand dollars, and

sand shares

corporation

issues

one hundred dollars

one thoueach,

the

holder of one share owns one one- thousandth part

of the corporation and the property held

[131]

by

the

How

The holding

corporation.
its

Save Money

to

owner to one vote;

of this share entitles

he holds two shares, he

if

has two votes.

The

permanent

or

real

value,

unfor-

but,

tunately, not always the selling price, of stock

is

dependent wholly upon the assets of the corporation

and

present

its

or

prospective

profits.

Practically all corporations are controlled by one

man, or by a few men, and the small stockholder
has little or no voice in the management.
The
majority of stock controls, and a majority vote

of the stock

itself,

not of the stockholders,

elects

the directors, frames the policy of action, and

virtually handles the situation.

Let us suppose, for example, that there are

forty stockholders, holding one thousand shares
altogether, but that one man holds five hundred
and one of the shares he is practically manager
of the company, and may do as he pleases with it,
;

provided he does not permit provable irregularities

under the law.

The minority
is

exceedingly

The

stockholders have rights, but

difficult for

stockholders

them

control

in

it

to exercise them.

may do

as

they

please to an almost unlimited extent.

As a matter

of fact, comparatively few corpo-

rations are other than partnerships, the stockholders, except those holding a majority of the
[

132]

Investment Value of Stocks

stock, are less in control than silent partners are,

and usually have less power and fewer rights.

Large enterprises, and even small ones, are incorporated, because by so doing, the owners escape,
as a rule, personal liability and responsibility;
and because it is easier to sell stock, and thereby
obtain outside capital, than it is to raise money
under a partnership.
Practically

all

corporation stock

is

subject to

move
more than a few points up or down. Stock may
pay any rate of interest, or none at all, and it
may be purchased for ten cents on a dollar, or
less, or for many times its face value.
If it pays
a dividend exceeding six per cent, and the corporation is well managed and has large assets, it
is not likely to sell at par, and it may be worth
twenty or thirty times more than its par value,
although comparatively few stocks sell for more
fluctuation, although the best stocks seldom

than double their face value.

say, twelve per cent,

twice

its

par value.

may

sell in

stock paying,
the market for

This would mean that

purchaser would realize but six per cent.

its

No

share of solid, legitimate stock, paying a good

rate of interest,

is

likely to be obtainable at a

price which would allow a net dividend exceed-

ing six or seven per cent.

As

the share of stock represents ownership and

[133]

Hoic
management, and
property,

bond

it

Save Money

not a mortgage lien upon the

is

does not have the intrinsic value of a

nor does

to

it

give the

same

speculative,

and

its

ovvner

is

pays
more

a larger

risk

security.

a larger rate of interest, because

its

takes

It

value

than does the holder of a bond.

Preferred stock

a preference over
poration

fail

may be described as that holding

common stock. Should the cor-

or liquidate, the bond-holders, and

upon the

those having mortgage or other liens

property, are paid

Then come

first.

the pre-

ferred stockholders, then the owners of the com-

mon

stock.

Preferred stock

may and may

have a higher intrinsic value than that of

and it may sell for less.

stock is paying a large dividend,

If the

stock,

it

will

not

common
common

bring very

much more than preferred stock will, but if the

company is suffering from disaster or financial
weakness preferred stock offers greater security.

The
over

interest on the preferred stock cannot be

the

amount

specified

though the common stock

If the

as large a dividend.

a good business,
rate

of

interest

stockholders.

it

upon

may

even

company

is

not doing

cannot pay, of course, the

guaranteed

They

to

the

full

preferred

are not sure of receiving the

interest agreed upon, but they

receiving

face,

its

be paying ten times

are sure of not

more than the interest agreed upon.

[131]

Investment Value of Stocks

The

full

amount of

on the

interest specified

preferred stock must be paid before the

common

stockholders receive any dividend.

Would

man

I advise the

with a small income

common

to consider either preferred or

an investment?

stock as

I do not feel justified in answer-

ing by an enthusiastic " yes," or by an emphatic

" no."

Stock

buying,

and

selling,

holding

belong

men of money, to professional financiers,

those who can afford to take more or less

rightly to

and

to

speculative chances.

It

is

obvious that the aver-

age salary-receiver, and that

all

wage-earners,

are not in a position to take more than the very

minimum
their

of risk, nor can they afford to invest

money, as a

rule, in

to fluctuate in value.

anything which

is

likely

would not advise them,

necessarily, against holding a few shares of gilt-

edged stock, of standard stock, of stock which

more
which

likely to

go up than to go down, of stock

cannot under

conditions drop

stock exists, but

as to

one

is

other

than extraordinary

more than a few

it

pay exceeding

Unless

points.

Such

cannot often be purchased so

six

per cent.

thoroughly familiar with the

stock market, or has conservative friends

investors

is

rather than speculators, to

can go for advice, he had better

[135]

who are

whom

he

let stocks severely

Hotc

Save Money

to

alone, partly because the security offered

is

not

good as that presented by the strong

savings bank and the solid bond; and, further,

likely to be as

because when one begins to buy stocks he

to become infatuated with what

may

is

likely

be called a

sport, and this tendency, which frequently becomes

chronic, usually results in disaster.

The reader

is

requested to study the other chap-

ters on stocks, especially the one entitled " Specu-

lating in Stocks."

156

Speculating in Stocks

CHAPTER XVII
SPECULATING IN STOCKS

WHILE

the element of luck, or chance, or

speculation,

accompanies

all

business-

doing, and cannot avoid being a component part of

every investment, and of everything which represents value, the so-called stock speculator operates

along

lines diametrically

opposite to those usually

employed by the ordinary business man, and to

those necessary to the conduct of regular business,
like the

The

manufacturing and

action of business, and the principle of

conducting
based,

selling of commodities.

it,

upon

are either based, or supposed to be

the

making

intrinsic values, things

and

which

distributing

may

of

be measured

or weighed.
Stocks
value; yet
selling

may have, or should have, a definite

many of them are purely speculative,

high to-day and low to-morrow, and the

owner of them may, at no time, have more than a

small equity in what he owns or thinks he owns.

The commodity

or general merchandise

may

be subject to the fluctuations of the market, but

its

value usually remains the same, or about the

same, except under unusual conditions.

[

137

How
The

stock

Save Money

to

may and may

Its selling price

is

not have intrinsic value.

often problematic.

It

likely

is

more than it is worth to-day, and less

than it is worth to-morrow; and, if it is worth
nothing, it is by no means impossible to sell it for
something, if it is held by those who know how to
to sell for

manipulate

but the small investor

it;

is

never in

that class.
If the corporation has a negotiable asset equal
to its stock issue,

and

this asset

is

likely to

remain

permanent, then each share of stock has a

nite value, subject to

defi-

minor fluctuations; but

if

the stock represents " water," and has only an

inflated value, or

then

it

is

part real and part "water,"

can have no standard price and

of actual valuation.

subject to

Even

fluctuations,

by a shrinkage

little

basis

the best of stocks are

caused,

not necessarily

in the actual valuation, or

because

of increased or decreased business, but because a

syndicate of underwriters and manipulators are

playing a game with them, with the public on the

other side; and in this contest, the public seldom
wins.

For example, a

tiable

assets,

railroad has certain nego-

consisting of

rolling-stock, its real estate,

is

doing.

its

right-of-way,

its

and the business

Its stock, therefore, unless there

it

be a

flood of business or a general depression in business, should be

worth the same to-day as

[138]

it

was

Speculating in Stocks
yesterday, and yet

may go up

it

points in twenty-four hours.

the owner of

up again or he can aiford

goes down,

it

money, unless

loses

it

down a few

or

If

to carry

it

soon goes

The

it.

reg-

ular commodities and merchandise are influenced

by

also

financial

movements, but are not as sen-

sitive as stocks are,

and are subject to

less fluctua-

tion.

The trading
values

there

is

which represent intrinsic

no business reason why

carried on

The

in stocks

a thoroughly legitimate business, and

is

stock market

is

should not be

it

by men who understand

it.

preeminently the exclusive

arena for those who enjoy fighting, and who know

how

to fight,

who laugh

at failure; but

it is

at success

and who smile

not for the outsider, and the

so-called tenderfoot.

It

to travel

him

easier for

is

on the red hot pricks of trade than

it is

to

walk

for

him

through the mazes of the stock market.

Stock buying and selling

is

a business in

itself.

Success depends upon a thorough knowledge of

the situation, but even the closest familiarity with
the business

may

avail for

nought

in the

long run.

large proportion of stock manipulators, and

dealers in stocks, even of the better class,

completely swamped by the rise and

market.

They were

rich yesterday,

to-day.
[

139

fall

may

be

of the

and are poor


How

Save Money

to

The great highway

of

life is

lined

on both

sides

with former inmates of the stock exchange,

who once

travelled

men

by automobile, and are now

either dead or are crawling into obscurity.

The

stock market, from the curb to the legiti-

mate exchange,

is

the cause of

more

than

failures

can be laid against any dozen other business factors put together.

The majority

of small investors keep away, or

are kept away, from standard stocks.

They

in-

habit bucket-shops, and surround the

offices

of

low-class brokers,

who

sell

less-than-nothing, noth-

The very

ing, or almost nothing, for something.

atmosphere of the bucket-shop,

gambling-den,

They

are

attracts

intoxicated

them

like

and holds

The bucket-shop

is,

care

else in their

They

rush to get rich mighty quick.

gamblers, neither more nor

them.

They

with greed.

nothing for honor, or for anything

mad

that of the

are

less.

generally defined, a bro-

kerage institution, where

all

kinds of stocks,

good, bad, and worse, usually the

last,

are sold

on illegitimate margin, the purchaser seldom having any tangible equity, and often no ownership
in

what he thinks he has purchased.

The bucket-shop proprietor plays

to

win,

plays his customer to lose, and he always plays

with loaded stocks as he would play with loaded

[

140]

Speculating in Stocks
Occasionally the customer

dice.

permitted to

is

may

fleece

handsomely

fur-

win, that the bucket-shop proprietor

him

in the end.

Bucket-shops

are

usually

made extremely attractive to their customers, who are offered every superficial courtesy,

nished and

even to free letter-paper, telephone, and postage

stamps.

Hundreds of thousands of men, and thousands

of women, owe their downfall to speculation in
stocks, and most of them have reached the pit of

way

despair through the open

They know nothing about

buy them

as they

of the bucket-shop.

stock values, and they

would match pennies, virtually

staking their money upon the turn of the fraudIf they win, luck or ac-

ulent wheel of fortune.

cident

responsible for

is

receive their deserts.

it.

If they lose, they

Where one

small investor

wins at stock gambling, or at stock buying, a

hundred

lose,

and practically

all

of

them go down

in the end.

The mania for stock gambling (I put it this

way instead of calling it speculation) is as fatal
as is that which makes a man a slave to liquor
or opium.

It gets a grip

tain ruination.
is

infectious

No

upon him

to his cer-

It becomes a chronic disease.

It

and epidemic.

one can afford to dabble

[141]

in

stocks in a

How

Save Money

to

speculative way, either through the bucket-shops

or the regular exchange, or to buy high-grade

stocks or those of questionable value, unless he
financially able to stand

many and

and has the mental capacity

the

face

is

frequent losses,

to look disaster in

without flinching; and, further,

is

so

situated that his downfall will not affect others

who are
a

man

He must

innocent.

take chances such as

of moderate means has no moral or other

right to take.

Stock speculation for the

or for the rich

moved from

man

man

of small income,

of inexperience,

is

as far re-

the legitimate and careful investment

as the cold of the

North

is

distant from the heat

of the Equator.
I have heard that there are, located in

some

mysterious somewhere, a few small investors who

have successfully played the game of speculation,

who have won by

luck,

and yet had sense

and stop at the

enough to pocket

their profits

right time; but I

am bound

never been permitted to rest

to say that I have

my

eyes

upon one

of these speculative wonders, and I never have

been face to face with any one who has seen any

one of them or could give me his address.

There

is

an immutable law which makes

it

well-

nigh impossible for the gambler either to save,

or to continuously win, or to come out more than
[

142

Speculating in Stocks
But even if he could break even,
and make a fair profit, I would protest against
any form of stock gambling, or any kind of stock

whole, at best.

man

speculation, for the

First, because

it

of small income:

morally wrong for him,

is

anyway, whether or not

it

be right for the

man

of money.

Secondly, because every form of gambling, including speculation, leads to financial degrada-

and

tion

is

responsible for a large part of our

business dishonor, and for premature failure and

disaster.

Thirdly, because no

man

of

little

money, with

a family dependent upon him, or even one without dependents, can

To

chances.

mortgages

afford

to

take speculative

do so discounts his present and

his future.

I have never

known a

speculator, even one of

pronounced success, to recommend speculation,

certainly

not to the salary-receiver and wage-

He

earner.

would no more think of giving

this

advice than would the opium fiend advocate the

opium

To

habit.

take more than fair chances, to enter into

speculation,

if

one has only a moderate income

and has a family,

is

is

as criminally

wrong

as

it

to rob the cash-drawer.

am

speaking emphatically, because I realize

[143]

How

Save Money

to

the danger, and because I

know what

am

talk-

ing about.
I would advise the small investor, the

man

of

family, unless he be wealthy, the salary-receiver,

the wage-earner, and the average man, to shun

the stock market, and particularly the bucket-

shop side of

it,

as he would the plague.

I would

even go so far as to advise him never to invest

money

his

in

fluctuating stocks, even

if

he

is

reasonably sure of winning, because the glory of

the initial victory

may

lead

him on to

financial

disaster.

Many

a small investor goes into stock buying

because he has received that peculiar something,

or that indescribable nothing, which

is

know

as

a " tip." Ninety-nine and nine-tenths of the socalled " tips " are intentionally misleading.
People

who have "

tips "

good for anything, usually

have brains enough to keep them to themselves.

Most of the " tips " have strings tied to them,

and hooks inside of them. They are usually baits

cast, not by fishers of fish, not by fishers of men,
but plain, every-day catchers of that peculiar
life known on

wiggling and irresponsible form of

the street under the very appropriate and signifi-

cant

title

of " suckers."

When you

have a

little

money, and do not know

144

Speculating in Stocks
what to do with

it,

do not speculate with

it.

Better stick to the old-fashioned stocking, which

has but one hole, and that an entrance, or to the

pantry sugar bowl, which does not

tents if

it is

kept right side up.

145]

spill its

con-

How

Save Money

to

CHAPTER

XVIII

BUYING STOCKS ON MARGIN

STOCKS

are purchased by payments in full, or

by substantial partial payments, or they are
bought, or apparently so, on what is commercially known as " margin."
While a " margin " is virtually a partial

payment,

it

because of

is

its

appropriately called a " margin,"

smallness.

A first-class
to sell
ditions,

or reputable broker is not supposed

"
margin," except under special conon

and even then he

is

not likely to receive

less

than a very substantial payment on account.

An

unreliable,

disreputable,

and usually thor-

oughly dishonest, broker or dealer

most invariably

sells

in stocks al-

on small " margin," and

comparatively few of his transactions

payment

in full, or

is

in

there a

a payment anywhere near to

the selling price of the stock.

The usual " margin "

is

as low as

is

conducive

to the broker's, not the investor's, safety, the for-

mer requiring a payment just large enough to

cover any probable depression in the market or
selling price of the stock.

The bucket-shop proprietor and margin-man

[

146


Buying Stocks on Margin
invariably deal to win, and never use their

money

in the play.

small investors,

who

own

Their customers are usually

the " lambs " in the street,

possess neither financial knowledge, nor

much

of any other kind, victims of acute avarice, fool-

moths who

ish

casionally,

fly

about the speculative lamp, oc-

and usually by accident, keeping out

of the flame, but always getting burned in the end.

usual " margin " required by the broker

The

about ten per cent of the real or imaginary

is

market value of the

stock.

For example,

probable selling price of the stock

is

if

the

ten dollars

per share, the broker demands a deposit of one

for which he will purchase the stock or

dollar,

pretend to do so, and either carry

carry

it

for his customer.

it

or claim to

If the stock goes up,

say, to twelve dollars, the broker will, or will say

that he

will,

upon the customer's

request, sell the

stock and give the customer three dollars, less

commission; but in ninety-nine cases out of

his

a hundred, the broker will so play

of

judgment of

will

his

upon the lack

customer that the customer

If the
on " margin."

reinvest his profits

stock goes down, say, to eight dollars, then the

customer has lost the dollar which he deposited,

and must pay the broker another

dollar, or lose

his stock.

Most

of

the

stock

supposed

[147]

to

have

been

How

to

Save Money

purchased on " margin "

all.

The broker

is

If the customer loses, he

ment.

If the

never really bought at

carries the transaction on paper.

demands further pay-

customer wins, he does

his best to

keep him from taking his profits, and suggests

reinvesting,

and so on to the end of the customer.

Margin-buyers are virtually gamblers on paper,

and

their profits

may

remain on paper, but their

losses are real.

Theoretically it would appear that the purchase of stocks on " margin " is not inconsistent

with good business principles.

If it

is,

then

it

might be claimed consistently that the buying of

upon mortgage, or incurring any kind

real estate

of indebtedness, should be discouraged, and that

we should

fall

back upon the old-fashioned notion

that no one has a right to anything which he can-

not fully pay for in cash or

its

But

equivalent.

fortunately or unfortunately, getting into debt

has become, by custom, a legitimate part of business-doing.

Comparatively few business men, whether speculators or not,

when they

pay

receive

it.

in full for

Some

what they

running an account or getting trusted

business policy than to

variably in cash.

that a

receive

of them believe that

make

full

is

better

payments

in-

Let us suppose, for example,

man can purchase

[148]

goods, either on long

Buying Stocks on Margin

by a payment

from twenty-five to
bill, and that a
full cash payment would not save him more than
two per cent. This is considered good business,
provided the man has solid assets, and can, if
credit or

he

of

per cent of the face of the

fifty

meet the indebtedness, and, further, pro-

will,

is

worth more

him than the discount he would

receive for

money

vided that the use of ready

to

cash.

Getting into debt

not overused,

it is

for most of the

of

is,

therefore, perfectly legit-

made

imate, or has been

so

harm

in it is

and not to the action

it

Indebtedness

by custom.

If

it

is

not to be condemned generally,

may

due to the degree

itself.

be both a business virtue and

a business curse.

The

right proportion

dishonest, but too

gerous, runs clear

is

much
up to

of indebtedness
of

it

is

is

not

positively dan-

the line of failure, and

often the basis of criminal dishonesty.

Do
that I

not misunderstand me, and do not think

am

encouraging debt of any kind, except

pays to get into debt. No one has a

right to purchase anything which he is not rea-

where

it

sonably sure of being able to pay for.

If he

runs into debt he should have business reasons

for

so

'

doing,

reasons

of expediency, not

probable inability to make good.

[

149

To

of

incur any

How

Save Money

to

other than a safe indebtedness

not only

is

dis-

honest, but works injury to the doer, perhaps

not at

first,

but his downfall

is

certain in the

end.

Common
of
in

business

indebtedness,

raising

the

money upon mortgage or other security,

is
principle and in fact diametrically different

from buying stock on " margin."

It

difficult

is

to explain this, for theoretically they are alike,

but practically they are far removed from each

other, particularly in result.

Comparatively few careful borrowers meet with

disaster

on

account

of

the

transaction,

while

practically every buj^er of stock on " margin "

is

either a heavy loser or finds himself wiped off

of the financial slate.

may we

In this particular case,

not judge the action by the result, and

not attempt to analyse too minutely the component parts of the transaction

Most emphatically

itself.

would advise the small investor to refuse absolutely to purchase stocks of

any kind on any size of " margin," even on safe
" margin." It is better for him, as a matter of
I

principle and for safety, to

make

for the stock he buys, or not to

True, a " margin "

may

full

buy

be safe to the

payment
it

at

all.

man who

understands the market, assuming that any one

really knows it, but the " margin " practice is

[150]

Buying Stocks on Margin

decidedly risky and

the cause of most of the

is

financial downfalls of small' speculators.

The bucket-shop or margin-broker

est because he

unwritten
If he

but

dishon-

is

breaking both a written and an

is

established

firmly

financial

dishonest he cannot be trusted, and

is

law.

he

if

cannot be trusted, he should not be patronized.

It

is

never safe to deal with a swindler, whether

you are buying stocks or horses. Even if you

know stocks and horses, he will get the better of
you sooner or later, unless you are a swindler
yourself, and then you will take turns with him,
each alternately getting the better of the other.

The

stock gambler and small investor patron-

ize the

bucket-shop or margin-shop because there

the dollar appears to go further than

it

would

The bucket-shop

or mar-

gin-man cares nothing for the customer,

in fact

with a legitimate broker.

his customer's loss

is

likely to be his gain.

would not be successful

est received

any

if his

He

customer's inter-

real attention other than the en-

couragement which draws the customer deeper

He encourages the sale of stocks

on " margin," and will take the smallest " margin " consistent with safety to himself.
into the mire.

Many
any
it

of these so-called brokers never purchase

stock, except

when forced

to

make good, and

often requires threats of arrest to compel them

[151]

How
to meet their

to

Save Money
Their dealings are

obligations.

often wholly on paper, and the customer has, at

best,

mere gambling chances.

The customer

is

always at a disadvantage, for

the broker invariably deals to win, and he wins

anyway, whether or not his customer loses.

Buying stocks on " margin " is not only pure
and simple gambling, but it is more dishonest
than gambling, because the gambler's pot may
contain some tangible property, while the margin-gambler usually plays upon paper, with small
actual chance of collecting his winnings,

if

he

should appear to win, and with the absolute certainty of being obliged to

More men have been

on " margin " than
the practice

is

pay

his losses.

ruined by buying stocks

any other direction, and

to be condemned without even a
in

suggestion of qualification.

Where one margin-

dealer makes a dollar, thousands lose ten dollars,

and

all

of them eventually go to pieces.

The

stock gambler, and particularly he who purchases

stocks on " margin," takes more desperate chances

than does the buyer of lottery tickets or the

better on horse races.
ally represents

The

lottery ticket usu-

an opportunity, although a very

small one, of getting something, and some of the

horse-race gamblers have to win; but statistics

[152]

Buying Stocks on Margin

show conclusively that the small investor is absolutely sure of losing in the end if he buys stocks
on " margin " or attempts to get rich by speculating in stocks.

In

many

States bucket-shops are prohibited

law, but one

may gamble

in

stocks,

he

if

by

will,

without the aid of the bucket-shop, and without

buying stocks on " margin." The small investor
or

man

in

stocks, whether he

of low income has no business to dabble

" margin," unless he

buys them outright or on

is

willing

to

take unfair

and to assume the very maximum of

and is foolish enough to be willing to

chances,
risk,

stake his

all

on the prospect of doubling his

money.

He may

possibly

make money for a time by

Even if he takes ninety-

speculating in stocks.

nine chances out of one hundred he

ally win,

and he

and sometimes luck seems

is

may

occasion-

to be with him,

trump every transaction; but

able to

experience shows, beyond a doubt, that the small

investor invariably loses sooner or later, usually
sooner.

True, he should have sense enough to

stop after he has

made some

not stop; for the

foolish

man

success, but he does

of small income,

who

is

enough to speculate, has usually not brains

enough to be

satisfied with

[153]

any moderate degree

How
of profit, and

game

is

Save Money

to

pretty sure to remain in the

until everything he has staked

is

gone.

Unless he understands the stock market, the

farther he keeps

he

away from

it,

the better

off

is.

The

bucket- or margin-shop

is

one of the most

largely patronized gates to financial

154]

hell.

Industrial Stock

CHAPTER XIX
INDUSTRIAL STOCK

INDUSTRIAL

stock

erty, good-will,

and

a share in the prop-

is

profits of a private cor-

poration doing business under a charter issued

to

it

by the

State, without interference from

any

national or state law other than that which applies to corporations in general.

It does not hold

or operate under a franchise, has no eminent do-

main rights, and cannot use any property, unless

it owns or leases it.

The

private corporation

is,

in fact,

a partner-

ship for the doing of business, except that the

ownership

is

vested in the share-holders, or stock-

holders.

During the

last

private business
epidemic.

Many

few years the incorporation of

enterprises

has become almost

corner grocery store,

and

drug shop, are incorporated, although they may

be doing a very moderate business.
Formerly
there were comparatively few private corporations other than those representing vast interests.

Then, practically

all

business was done under co-

partnership.

The

practical diiference between a corporation

[

155

'

How

to

Save Money

and a co-partnership is largely that the liability

of the owners is limited in the former and less
limited in the latter.

Under common

law, all co-

partners are liable for each other's acts, and this

liability

may

extend to personal property; while

in a corporation, the stockholders or

no

liability

beyond

their stock

owners have

and the corpora-

may

tion property itself, except, sometimes, they

be held for a result of negligence.

ship of a corporation

The owner-

easily transferable, in

is

whole or in part, much more so than

it

is

in

co-partnership.
Industrial

stock,

then,

simply

represents

share in the ownership of a corporation doing

business similar to that done under co-partner-

and

ship,

is

not a public service company,

like

those owning or controlling railroads, trolleys,

gas, water, and electric light.
of

firm

shoemakers

desires

to

For example, a
incorporate

its

business instead of continuing under a co-partnership.

The company

capitalizes

at one hun-

dred thousand dollars, issuing one thousand shares

of stock at a par value of one hundred dollars
each.

In

all

will retain as

and

probability one man, or a few men,

many

as five

hundred and one shares,

will control the business, the

stockholders

having

minority of the

comparatively

against the majority, unless

[156]

it

few

rights

transgresses the

Industrial Stock

Four hundred and

law.

ninety-nine, or a less

number, of shares of stock are offered for

part of them

may

sold later on,

The

it.

sale,

or a

be held in the treasury, to be

seems advisable to part with

if it

stock of the company, other than the

treasury stock, belongs to the individual holder

of

it,

and not to the company, and he may or may

not turn the receipts of

ness,

sale into

its

the busi-

but the money coming from the sale of

treasury stock cannot rightly be used for other

than for the conduct or development of the business.

But

management

the

as

is

to

likely

be

wholly in the hands of the majority of the stockholders,

it is

not at

all

difficult

for the receipts

coming from the treasury stock eventually to

reach the pockets of the majority stockholders,

and be of

little benefit

of course, that the

honest

men and

Many

to the business, provided,

company

is

controlled

by

speculators.

private corporations issue what

as preferred stock, as well as

preferred stock carries with

common

it

is

yields

an

a real or apparent

pay any more, even

enormous

company earns

if

is

not

the business

Occasionally

the

as high as thirty to fifty per cent,

or even more, on

pay more than

profit.

known
The

stock.

guarantee to pay a specified dividend, and

allowed to

dis-

its

six

common

stock, yet does not

to ten per cent on its pre-

[157]

How

Save Money

to

(See description of preferred stock

chapter entitled " The Investment Value

ferred stock.
in the

of Stocks."

During the

last

few years enormous quantities

of industrial stock have been presented, and at

dumped upon the unsuspecting pubThe newspapers have been filled with pages

times, fairly
lic.

most

advertising,

of

the brightest

jarring

colors,

adjectives,

unprecedented

of

which

is

over-burdened

printed

and

unparalleled

offering

opportunities

of

in

with sense-

getting-rich-

mighty-quick at hardly the suggestion of the mini-

mum

of cost.

The foregoing

statements, though true, must

not be construed to mean that

all industrial stocks

are other than sound and do not represent tangible

property

and probable

dividends.

The

very nature of the law permitting the incorporation of private enterprises offers unusual oppor-

tunity for fraud, and gives, I believe, the largest

market place for the successful

or next to worthless, stock.

sale of worthless,

It enables

swindle each other legally, and offers a

on fraud and misrepresentation.

it

men to
premium

Undoubtedly,

can be regulated, but not wholly controlled, by

law.

So long as lambs are born, there

will

be

wolves to feed upon them.

The

practical advantage of an industrial stock

[158]

Industrial Stock
as

an investment,

that

is

it

is

likely to

pay a

larger dividend than can possibly come from a

sound and safe bond or other equally solid

Some

curity.

industrial stocks

pay

as

much

se-

as

ten per cent, and even fifty to one hundred per

cent

is

not impossible, although comparatively

few safe industrial stocks are likely to bring more

than six to eight per cent, at the outside, except

during " spurt years."
It

is

obvious that few good industrial stocks,

heavily secured with property, would be sold at

par,

they are paying more than a good rate

if

of interest.

The average
even dividend.

industrial stock does not

It

likely to be

is

and low the next.

It is

pay an

high one year

subject to tremendous

fluctuations, but the best industrial stock seldom

pays

less

than six or seven per cent net on

its

selling price.

The disadvantages

of industrial stock as an

investment are:
First,
tion.

it is likel}^

The

to be subject to great fluctua-

business

may show

large profits one

year, and a loss the next.

Secondly, a change of management in the business

may

may

lower the profits or break the business.

occur at any time.

Thirdly,

all

private

Bad management

corporations,

[159]

barring a

How
few

to S-ave

Money

and
cripple or ruin the com-

illegal trusts, are subject to competition,

competition

this

may

pany.

com-

Fourthly, comparatively few industrial

panies own properties equal in intrinsic value to

the

amount

of the stock issued, although in some

cases the properties cost as

under the hammer.

mended to

Sixthly,

its

modem

what they cost when

tories will seldom bring

often be

much or more.

even well-equipped and

Fifthly,

fac-

sold

broken business cannot

original condition.

corporations

industrial

are

usually

by one man, or a few men, and the

death or disability of these men, or any dishonest
controlled

practice on their part,

company or

the

likely either to

is

break

to materially affect the value of

stock.

its

Scattered over the country are hundreds of

thousands of manufacturing and other concerns,

which are loading their stock upon the public,

giving the buyers practically no security, and
very

little

prospect of receiving any dividends,

save the first one, which

Many

of

these

speculators,

may

be paid for bait.

corporations

who manipulate them

advantage and to the customer's

trol the

the

to their

by
own

They

con-

are

officered

loss.

majority of the stock, although most of

money has come from the minority

[

160

stockhold-

Industrial Stock

Of

ers.

but

rights,

minority

course,
it is

extremely

stockholders

difficult to

have

get them,

as the owners of the majority of the stock are

usually able to

override

any protest from the

minority.
I

would not advise men of small means, or with

moderate

incomes,

give

to

the

preference

As a

investment in industrial stocks.

rule,

to

would most emphatically warn them against purchasing the stock of any industrial company which
does not stand high in trade, which

managed, and which

servatively

is

is

not con-

not recom-

mended by high-class business men and bankers.

Unless the stock

will

be considered as collateral

by first-class banking houses, the small investor

had better have nothing to do with it.

When

and

cern,

and

one
is

is

an employee of an industrial con-

in

a position to know the character

stability of the house, he

may

consider the

advisability of investing a part of his savings in

company which employs him;

but he should never do this upon the unsupported
representation of any officer of his company,
however much he may respect that officer and

the

stock of the

believe

in

his

interested official

stock

is

It

integrity.
is

is

obvious that an

likely to be biassed.

worth buying, several

of deposit will accept

[

it

161

as collateral,
]

If the

first-class

banks

and the

How

Save Money

to

it offers is known to financiers and busimen who have no interest in it, except that
thej hold it as an investment.
The mere fact

security

ness

that you
sufficient

your employer does not furnish

like

reason for buying the industrial stock

he represents.

Thousands
attempted

of

industrial

unload

to

corporations

have

upon

their

stock

their

employees, and have appeared to do

This

it

as a favor.

adding hypocrisy to dishonesty.

is

I again advise the employee to be careful.

the stock

no

is

reliable

worth buying

man

questions

its
it,

value

is

and somebody besides

the officials of the corporation are buying

holding

is

it

and

it.

But no matter how good the stock may

in

If

known, and

be,

it

inadvisable to place the whole of one's savings

any one form of investment.

By
stocks

all

means,

which

particularly

are

advertised

shun
with

industrial

bombastic

announcements, and which appear to offer enor-

mous and unusual

interest.

I believe that practically

all

heavily and sensa-

tionally advertised industrial stocks are of ques-

tionable value, and are, at best, purely speculative

in fact, I feel that

incorporated

upon the

with

public.

most of these companies were

the

intention

of

unloading

Probably the business repre[

162

Industrial Stock
sented

half dead, or

is

dead, the factory old-

fashioned and unproductive, and the profit purely

The

prospective.

may have

issuing the stock

time,

business used as a basis for

been profitable at one

moderate

although

simply rusted out.

is

It

has

used as the

Its present condition

basis of the advertisements.

intentionally forgotten, that the advertisement

is

may announce what

,

volume.

in

Its past record

has been done,

appear to guarantee what

prospectus

is

will

and may

be done.

If the

truthful, it tells the truth only in a

technical way,

and makes the story read

well b}^

the presentation of generalities and pasts, and the

omission of presents, with zenith-painted pictures

of futures.

The

stock, then,

is

likely to

have

little

invest-

ment value, and may not have even a speculative

one.

The majority
are

sold

of first-class industrial

privately,

or

advertisements, and the

stocks

with modest newspaper

money

received

wholly for development purposes.

is

used

For example,

a woollen manufacturer has succeeded in building

up a splendid

business.

He

has every reason to

believe that he can materially increase his output.

He

can do this

his profits,

in

which

secondly, he

may

two ways

will allow

first,

by turning

in

him to develop slowly

incorporate his company, or,

[163]

if

How

to

Save Money
This

incorporated, increase the capital stock.

he places on the market in a dignified way, and

the

money

received

from the

sale of the stock

he

uses legitimately for the enlargement of his busi-

The chances

ness.

may not

be

of success are favorable, but

sufficiently

so to suggest that the

by small investors, or by men

of moderate income, who had better place their
money where the security is at the maximum, or
close to it,
in the savings bank, or by the
stock be purchased

purchase
or

of

of

bonds

high-class

other

intrinsic value,

which

securities

which

mortgages,

or

have

definite

are not subject to more

than slight fluctuation, and which are not controlled

by any one man or small combination

of

men.
If I

may judge from my own

experience (and

I have personally investigated a very large

num-

ber of industrial stock propositions), I would

say that I look upon the undue and extravagant

advertising of an industrial stock as proof positive

that

it is

of

little

or no value, and that

worth anywhere near what

is

it is

claimed for

it.

not
If

company is half as reliable and half as well

known as the advertisement states, and if the stock
the

is

worth what

is

claimed for

to be easy to raise all the

the

trade

represented,

it,

it

would appear

money from, or
or

[164]

from

within,

conservative

Industrial Stock
speculators,

who

are willing to take reasonable

chances.

So long as money continues to be cheap, and

there is so much of it, men with good stock to sell
will

address their appeals to men of money, and

will

not go to the great expense of unloading upon

the general public.

fraudulent or questionable stock

advertised, because

who are

it

is

heavily

cannot be sold to people

able to measure

and weigh

it.

It

must

unloaded upon those who are ignorant of

be

and who can be coerced into buying any-

values,

thing which looks well on the face of

With

billions

of

money lying

it.

idle,

and with

thousands of capitalists clamoring for investments,

it

would appear to be obvious that owners of a

hundred-thousand-dollar corporation would not go

to the expense of putting out
five

thousand dollars

stock, if

in

from ten to twenty-

advertising,

when

their

worth buying, would be handled at a low

commission by reputable brokers.

With

the small investor, or

means, who

is

man

of moderate

considering industrial stocks,

it is

simply a question of whether or not he prefers a

high rate of interest with

little

security, than a

low rate of interest with ample security.

The

fact

that industrial stock, or other stock for that matter, is

paying a high dividend must not be conr

165

How

Save Money

to

strued as prima facie evidence that; this dividend

will

Perhaps

be continued.

bait, so as to attract

is,

are large,

is

and has been,

if its

being paid as a

new stockholders.

back of the dividends

business

it is

What

is

If the

all-important.

successful, if its assets

profits are at least fair, if

it

is

so organized that the death or disability of one

or a few men will not injure

commodity

sells

of

it,

if it

presumably

makes and
permanent

demand, then the small investor may favorably

consider its stock, although I would advise him
to give something

All

business

is

more

solid his preference.

uncertain,

especially

private

and no one can guarantee the intrinsic

or dividend-paying ability, of any indus-

business,
value,

trial stock.

am

not uncompromisingly advising the small

investor against good industrial stocks, but I

am

simply suggesting to him that there are other

forms

of

investment

offering

although at a lower rate of

The

greater

security,

interest.

man of much money,

good industrial stocks a particular and
available opportunity for both investment and
speculation, but this book is not directed to him.
When one becomes wealthy, and can afford to
large investor, or the

finds in

take speculative chances or losses, one

position to consider

many forms
[166]

is

in

of investment

Industrial Stock
which are not safe for the

man

of small income

to purchase.

Good

industrial stocks

are thoroughly legiti-

mate, and. they are far removed from fraudulent

propositions.

In connection with this chapter, however, I

would ask the reader to study the one entitled

" Fake Investments," not because industrial stock
is

fraudulent, or even questionable, but because

nearly every form of fake investment and opportunity to lose

money

is

some kind of industrial

stock, including the always-lose-your-money-quick

mining scheme, which frequently does not represent as

much

as a hole in the ground.

[167]

How

Save Money

to

CHAPTER XX
THE REAL ESTATE MORTGAGE

THE mortgage

on real estate

is,

and always

has been, considered one of the safest and

basic forms of investment, and

is

used by every

and money-savers, except those

who can accumulate but a few hundred dollars.
class of investors

mortgage is a different affair, and is a

upon personal property, such as furniture,

chattel

lien

carriages, and clothing.

mortgage may be untechnically described as

from the mortgagor to the
mortgagee, but it differs from the ordinary bill
a,

sort of bill of sale

of sale in that the mortgagee's right of possession does not

mature

until the expiration of the

mortgage, provided the interest

is

paid as agreed

upon, and the mortgagor gets back his property

unincumbered by returning the money loaned by

the mortgagee on the date of the expiration of

the mortgage, or before,

accept

if

the mortgagee will

it.

Although a mortgage

in the eyes of the law,

is,

a virtual sale or transfer, both the mortgagee

and mortgagor are protected each against the

other,

the mortgagee, because of the security

[

168

The Real Estate Mortgage

offered;

and the mortgagor, because the

sale or

actual transfer of his property remains inactive

if

he pays the interest regularly and the prin-

cipal at maturity.

The property mortgaged, although

transferred to the lender,

is,

in

in

a sense

practical fact,

merely held as security by the mortgagee, who

cannot dispose of

it,

with any part of

nor remove nor interfere

except as specified in the

it,

mortgage paper, nor has he any other rights so

long as the conditions of the mortgage are lived

up to.
The mortgagor may
he owned

it

free

and

use the property as though

clear, subject only to inter-

ference on the part of the mortgagee

alters,

if

he abuses,

or does anything which will materially

les-

sen the value of the property.

mortgage on a piece of property is as good

is, and even better, unless the
mortgage covers the full value of the property or
as the real estate

is

in excess of

The

it.

mortgagee's

rights

come

before

the

owner's rights.
If the property

the mortgage

worth more than the face of

is

(sufficiently

depreciation), and the

and the insurance

ings

are

included,

is

title

more
to

adequate

it

to provide for

contains no flaw,

provided

build-

making insurance necessary

[169]

How

and

company

the insuring

mortgage

is

vestment as

as good, as solid,

is

sound, then a

and as safe an

in-

possible to obtain, with, perhaps,

it is

exception

the

Save Money

to

of

United

Government

States

bonds and gild-edged State and city bonds.

The

real estate

from three to
six
is

six

mortgage pays the mortgagee

per cent, occasionally more thaji

per cent; but any interest above six per cent

obtained at a sacrifice of the best security.

Mortgages on large

city properties, including

buildings worth several hundreds of thousands of

dollars or even

millions

of

are seldom

dollars,

written at a rate exceeding four per cent, and

some of them do not pay over three and one-half

These mortgages are held usually by

per cent.

banks, trust companies, or by large estates.

small

investor

indirectly,

never

figures

and has, therefore,

in

them,

The

except

interest

little

in

them, save as they represent a security for his

bank or other

deposits in a savings

The

trustees

of large

institution.

prefer the

properties

strongest security at a necessarily low rate of

interest,

and the large

city

mortgage

is

one of the

best investments for them.

Few homestead,

farm, or residential mortgages

are placed at less than four per cent, the average

rate in the East being five per cent,

West and South from

five

and

to six per cent.

[170]

in the

The Real Estate Mortgage

Rates of interest are subject to territorial or
financial conditions, the stronger the security the

During panics, when

lower the rate of interest.

much money

temporarily locked up,

is

it

may

be

sold or let out at an exorbitant rate of interest.

No

Eastern real estate owner

paying more than

five

is

in

justified

per cent, provided he does

not borrow more than sixty or seventy per cent

of the selling value of his property.

If the prop-

erty has a fixed value, which does not often occur,

he

may borrow more

He

per cent.

will

or six per cent,

if

than seventy per cent at

pay, usually,
he borrows

of building, the payments to be

five

five

and one-half

money in advance
made as the build-

ing progresses. This matter I have considered in

the chapter entitled " Owning a Home."

Money is worth, usually, a little more in the

West and South than it is in the more conservaEast

tive
is

and, therefore, a higher rate of interest

obtainable;

but

high

interest-paying

mort-

gages are not to be recommended to the small

and wage-earner, unless

thoroughly familiar with the property, and

investor, salary-receiver,

he

is

it is

considered

by conservative

investors as offer-

ing ample security.

not always written, and not by any means

always followed, savings bank regulation forbids

the loan of a larger

amount than sixty per cent

[m]

of

How

Save Money

to

the real or selling valuation of the real estate

example,

a parcel of real estate

if

f oi-

worth ten

is

thousand dollars, a savings bank cannot properly

than six thousand dollars upon the

loan more

is not by any
by other than the most conservative and best managed institutions, for others
frequently loan money dangerously close to

This condition, however,

property.

means

lived

valuation

up

t<^

but as they loan so much, they

suffer losses

which

will materially

may

not

lower the value

of the security offered their depositors.

The cheapness

of

competition

in

the

money

at certain times and

money-loaning

apparently

force some of the savings banks, and other conservative investors, to take greater chances than

they would permit under normal conditions.

But,

fortunately, these risks

are usually spread out

sufficiently to protect the

bank against more than

occasional loss.
^^Tien

this

practice

loaning as

of

much

as

eighty or ninety per cent upon property becomes

chronic, the transaction

and no bank

tion;
tises

is

is

on a plane of specula-

safe or sound which prac-

it.

The assessed valuation of real estate property

may not represent its real and selling value, but
in the

majority of cases,

it

price.

[172]

is

under the selling

The Real Estate Mortgage

parcel of real estate has two distinct valua-

tions

that

is,

It

is

it will

bring under the hammer,

at a forced sale; and, second,

owner can
will

what

first,

sell it

what the

for within a reasonable time.

unfair to appraise an estate at what

bring at auction, because ew properties

it

sell

to advantage under the red flag.

No
made.

general rule of valuation-making can be

Judgment

is

the strongest factor.

I not suggest, however, that

it is

May

reasonably safe

worth what

to consider a piece of property

it

would probably bring at auction plus half the

difference
estate

of the price which conservative

men

believe

would be realized upon

sold under favorable conditions.

the property would probably

real
it

if

For example,

if

at auction for

sell

one thousand dollars, and conservative appraisers

believe that

it

would bring twelve hundred dollars

under favorable conditions,

worth eleven hundred

it is

dollars.

fair to consider

One can

it

safely loan

from sixty to seventy per cent of eleven hundred

upon this property, and he should not

loan more than sixty per cent of its supposed
dollars

value,

located

unless

the

property

is

very

desirably

and appears to be subject to increased

valuation.

Real estate men, and

all

other

matter, are likely to be biassed, and

r

173

men
it is

for that

not well

How
to take the

to

Save Money

unsupported opinion of any one of

them, nor should you consult only buyers and

of

sellers

real

estate.

The

first-class

business

man, who undoubtedly owns some real estate, is

more likely to be fairer in his judgment.
It is difficult to get at rock bottom, but if you
loan only sixty per cent of what conservative men
consider

the true

the transaction

valuation,

likely to be reasonably safe, for

pieces of

much

good

is

comparatively few

real estate are likely to

drop as

as forty per cent.

Second and third mortgages are subsequent

upon property, a second mortgage covering

and the third mortgage covering the property after the first and
second mortgages.
They have no value, and
liens

it

after the first mortgage,

offer

no security, unless the property

more than that of the existing

first and second mortgages.

The

first

mortgagee has

all

first

the

is

worth

mortgage or
rights

and

and none of these extend to the submortgagee until the earlier mortgagee

privileges,

sequent

is satisfied.

Second and third mortgages are perfectly

if

the security

ciples, I

is

safe,

ample; but, upon general prin-

would advise the small investor to have

nothing to do with them.

They should be conwho are thoroughly

fined to experienced investors,

[174]

The Real Estate Mortgage

familiar with real estate, are able to weigh values
to a nicety,

and can afford

to take speculative

chances.
It

is

obvious that second and third mortgages

pay a higher

rate of interest than that required

by the owner of the first mortgage.

While the first or bottom mortgage
close to giving the

maximum

offers pretty

of security,

a fair rate of interest, the mortgage

and pays
is

a safe

investment only when the property has a tangible

or obtainable value, and
slight fluctuation,

insurance good.

is

not

when the

liable to

more than
and the

title is clear,

Further, the value of the mort-

is dependent upon its proportionate size

compared with the value of the property. A
mortgage for more than sixty per cent is not
considered positively safe, as mortgages run.
Seventy per cent may be fairly safe, and some

gage

times even eighty or ninety per cent

is

not with-

out good security; but the small investor should

seldom consider placing his money in a mortgage

representing more than

sixty

per cent of the

probable valuation of the property.

good mortgage

tion.

interest

It

cannot

specified.

is

not a speculative proposi-

possibly

pay more than

The mortgagee

is

the

not likely

to be able to obtain the property, for

if

it

is

worth much more than the face of the mortgage

[175]

How

Save Money

to

upon it, the mortgagor can prevent foreclosure,

and save his property. A good mortgage is,
then, simply an investment, and worth its face
value, never more or less.
Notwithstanding that the mortgage is theoretically safe, and the low mortgage looks absolutely
safe, numerous losses have occurred, due to
several causes.

may

First, the title

more

tain one or

which

own

the mortgagor

if

the property free and clear, and

without objectionable restrictions,

it

obvious

is

that he cannot give the mortgagee a good

to

it.

flaw in a title

at slight expense.

No

is,

Bad

title is

titles

This

soimd.

title

however, often cleared

are not uncommon.

one should place a mortgage until he

that the

con-

will invalidate it to

the mortgagee's loss; because,

does not

may

not be clear, and

flaws,

may

is

assured

be ascertained

with a reasonable degree of accuracy by a good

title-searcher, or the title
title

may

be insured by a

insurance company.

Secondly,
land,

the

policy

may

if

the property mortgaged

fail to

small part, of the amount insured.

the mortgagee meets with a loss, as

that the land

gage.

fire

is

occupied

company writing the

be able to pay any, or but a

insurance

fire

is

not

risk,

sufficient to

of course
[

176]

In this case,
it is

probable

cover the mort-

does not operate

The Real Estate Mortgage

unless there

is

perishable property in the form of

other

or

houses

Most

buildings.

of

the

fire

insurance companies are sound, and the insurance

policy offers, usually, ample protection against
loss

by

fire.

Thirdly, perhaps the greatest risk in mortgage-

taking

in the

is

property; that

making
is,

upon
money

of an unsafe loan

the lender loans more

than the value of the property would warrant.

The mortgagor

misrepresents,

intentionally

otherwise, and places an inflated value

property, which
unless one

is

it

may

or

upon the

be impossible to detect,

an expert.

In this country there are thousands of mort-

gages

written

for

amounts

larger

than

the

probable valuation of the property mortgaged.

There

is

property

no law against placing a mortgage upon

in excess of its valuation.
I have a

perfect legal right

to

lend

a thousand dollars

upon a hundred dollars' worth of property, and

the mortgage would be duly registered.
Speculators and dishonest real estate brokers

make a specialty of dealing in unsafe

They mortgage property of their
These
own, or held by dummies or middlemen.

frequently

mortgages.

mortgages are written for the

full valuation,

more than the valuation, of the property.

are entirely legal. They sell them to small

[177]

or

They
invest-

How

Save Money

to

ors, and to those who are not able to weigh values.

These men also place mortgages upon property
which they have for sale, the mortgage represent-

ing more than the value of the property, and

then attempt to

sell it

payment down,
For example, let us

for a small

the mortgage remaining.

suppose that a piece of property

thousand dollars.
the house to

sells

gage of about

worth

is

five

The real estate manipulator

a dummy, taking back a mort-

five

He

thousand dollars.

apparently, acts as selling agent for his

and

offers the alleged equity in the

five

hundred or a thousand

then,

dummy,

property for

The buyer

dollars.

gives a thousand dollars for the equity, when, in

he purchases nothing.

fact,

He

has simply made

the agent a present of a thousand dollars.

In buying a piece of mortgaged property, do

not consider the mortgage as safe unless

by a

reliable

bank or

then, subject

it

first-class investor,

to full investigation.

it is

held

and even

Many

man

has purchased a home under mortgage, and

has

for

several

years

made payments on the

so-called equity, only to discover that his first

dozen payments have been literally placed

in the

air.

Unless one

is

experienced in real estate,

it

is

practically impossible to appraise property close

to

its

actual selling valuation.

[

178

One

is

more

likely

The Real Estate Mortgage

to judge superficially, and to value the property

from what

it

appears to be worth at the present

without taking

time,

into

consideration

future

conditions.
It should be obvious that the value of a house,
is dependent upon both the present
and future worth of the land upon which it

for instance,

stands.

palace, costing a million dollars to

and located in the backwoods, might not

sell for more than a thousand dollars, because
nobody would want it.
erect,

In every country there are situated magnificent

residential edifices, costing vast

sums of money;

and yet comparatively few of them may be sold

more than a small fraction of their cost.

for

The

cost-valuation

except in close

tion.

must

not

be

considered

connection with location-valua-

mortgage of

thousand dollars, upon

five

a summer home costing a hundred thousand dollars,

may

not be worth more than half of

its

face

value.

Then, environment changes, and sometimes very

suddenly.

respectable neighborhood to-day,

becomes a disreputable

one to-morrow.

Land

worth one dollar a square foot on a certain street

may
now.

not bring

The

fifty cents

per foot

five

years from

erection of a factory materially injures

the selling value of residential property, and a

[

179

Ho'uc to Sa'ce

may

near-by

built

gsiiaige

Money
lower

it

twenty-five

per cent.
It

is,

however, very unusual for property to

much

depreciate as
life

of the average

as forty per cent within the

mortgage.

Let us suppose, for example, that you loan six

dollars
upon a ten-thousand-dollar

thousand

property, the house and land being worth, pre-

sumably, ten thousand dollars.

At

the time of

placing the mortgage you have ample present

security and probable future security.
likely that the building of a factory

any other condition

property

below

the

within

years.

If

for

five

more than

It is quite

near by, or

arising, will not bring the

point

six- thousand-dollar

your mortgage does not run

this length of time,

you are

rea-

sonably secure.

In determining the investment value of a piece

of real estate,
for

you

it is,

diagnose

to

present valuation.
do.

Even

as I have shown, as necessary

future

its

This

is

well

as

its

the shrewdest real estate manipulators

have suffered heavy

losses,

have become bankrupt.

and many of them

is an element of

There

risk in mortgage-taking, although

admitted by

Do

as

frequently difficult to

all

it

may

not be

real estate men.

not take a mortgage on a house to be built,

advancing

money

as

the

[180]

building

progresses,

The Real Estate Mortgage

the owner

unless

of the land

known

is

to

be

thoroughly honest, and the contractor or builder

is

man

of integrity.

True, the temptation to

obtain an additional rate of interest

is

great,

and

these mortgages are frequently thoroughly safe.

Many

residences are erected on these instalment

mortgages. The owner has his land free and

clear.

Let us suppose, for example, that the land

worth

is

a thousand dollars, and that the to-be-erected

house

will cost five

house

is

thousand dollars.

When

the

completed, the property will be worth six

thousand dollars.

The owner

of the land mort-

gages his land and his to-be-built house for four

thousand dollars, the mortgagee paying over to

him, or to his builder, the

money in instalments,
upon the entire four

the mortgagor paying interest

thousand dollars, although he

the whole of

it

may not

for several months.

It

is

receive

easy for

the contractor or builder, and for the owner himself,

to

likely to

ness,

misrepresent.

The mortgagee

is

not

understand thoroughly the building busi-

and he may pay over

the building

is

his

built, giving the

money

faster than

owner and builder

an opportunity to put the money into their

and to stop work upon the building,

from dishonest motives or from necessity,

pockets,
either

and both may use the money for outside speculation, with or without intention of making good.
[

181

How

The only advantage

is

that

it

Save Money

to

of this kind of a mortgage

bears an additional rate of interest.

While I consider the

real estate

mortgage one

of the best forms of investment, I would caution

the small investor, salary-receiver, or wage-earner

against mortgage-taking, unless he understands

who
However

the real estate business or has friends

give

him expert and honest

the mortgage

may

be, the

tied up, so to speak.

It

a mortgage, or to raise
notice,

advice.

money
is

in it

it,

safe

usually

is

often difficult to

money upon

will

sell

at short

and without paying a commission or bro-

kerage, even though the mortgage

may

be

gilt-

edged.

The man who

is

able to save only a little

money

had better be satisfied with the four per cent

interest paid him by the sound savings bank and
high-class bond, until he has sufficient money to
take slight chances.

Where

there

means great

is

little

money, and where

loss

disaster, four per cent with safety

is

better than higher interest with even not far from

the

minimum

of risk.

182

The

Chattel Mortgage

CHAPTER XXI
THE CHATTEL MORTGAGE

A CHATTEL

istered lien

mortgage

is

a legal and reg-

on practically every kind and

usually

sort of property other than real estate,

representing a loan on furniture, pianos, automobiles, horses, carriages, boats, clothing, jewelry,

and personal property, the most of which

or has been used, and
hand.

is

in use,

consequently, second-

is,

Chattel mortgages are placed, also, upon

stock in trade and every class of merchandise.

The property mortgaged may or may not

He

is

usually allowed

but he cannot transfer

it

from one place

remain with the mortgagor.

to use

it,

to another without the consent of the mortgagee.

Thousands of men, known as brokers and commercial agents, earn their livelihood by loaning

money on

this class of security.

It

is

a business

and should be practised only by those

who understand it. It offers, with the exception

in itself,

of

speculation,

the best

opportunity

for

loss,

except to those who are able to appraise values

and diagnose human nature.

It is practically
impossible for any one, unless he be an expert
from long experience, to appraise correctly the

[183]

How

to

Save Money

value of personal property; and judges of

human

nature are limited in number.

Many of the people who borrow on chattel

mortgages are unfortunate through no fault of
their own.

may

It

stances,

and

They

are

is

be due to unforeseen circum-

often the result of extravagance.

transiently,

or

chronically,

hard-

pushed they turn to the chattel mortgage through

;

necessity, often the

most urgent

necessity.

Fre-

quently they are unable to pay the principal or

even the interest; consequently the lender has to
foreclose.

Unless one

is

almost completely hard-hearted,

and devoid of most of the compassion which is

supposed to accompany humanity, he had better
keep out of this business. Of course, he has a
right to his money, but to get it, it is often necessary for him to cause much mental and physical
suffering, which frequently he must inflict upon
the innocent and dependent.

Under no

condition would I advise the small

investor, salary-receiver, or wage-earner, to loan

his

money, taking a chattel mortgage for securhe does it to help a friend, making his

ity, unless

act purely a matter of friendship.

to

it

am opposed

for him as a means of investment, for

goes into
ings, he

is

it,

using

it

if

he

as a receptacle for his sav-

pretty sure to be the loser.

[184]

The Fake Investment

CHAPTER XXII
THE FAKE INVESTMENT

THERE
claim

ments I

are several reasons

accuracy

statistical

am

about to make.

The

why
for

the

first

do not
state-

reason

is

based upon the impossibility of finding authoritative

There are facts and tendencies

data.

which we

see,

and which impress us with their

prevalence, and yet they cannot be measured

rule or collated
I

by

by numbers.

do not think that I

will

be accused of exag-

geration, or of an attempt to appeal sensationally to the reader,

if

I advance the opinion that

more money is lost, and more families are ruined,

by the purchase of questionable and fraudulent
mining and other stocks than result from any other
cause, in business and out of business, except,
perhaps, intemperance.

There are now before the public, and there may

be for

many

years, thousands of alleged invest-

all
of them sensationally
and most of them offering little other
than promises to do what cannot be done, and
what their promoters know is impossible of

ment

propositions,

advertised,

accomplishment.

They

are

[185]

virtually

wholesale

How

to

or retail separators

Save Money
of the

money, and their existence

is

people from their

responsible for an

unreahzed proportion of people among the great

middle class who are in precarious financial

cir-

cumstances.

Heavy
and

losses,

which produce present suffering

probably

aifect the protection of the future,

more men and women to the bad, and injure

more children by depriving them of the necessities of existence, than does any other factor

drive

which comes into our everyday

life.

loss of

one's savings, which are usually hard-earned

come from protracted

labor, a loss which

accompanied with inability to provide

and

may

be

sufficient

food,

and other bodily

more

responsible, directly or indirectly, for the

existence

necessities,

is,

I believe,

and prevalence of crime, than

is

any

other resourceful factor in the whole criminal

catalogue.
If this be true, and I have long heard it advanced by sensible men, he who swindles the public
and fraudulently obtains the people's money, is

more responsible for the birth and

than

is

he who practises

life

of vice

vice.

and promoter of fraudulent investments, who is usually a man of some apparent

responsibilitj^ intentionally ruins men and women,
and literally spreads disease and poverty. There

The

seller

[186]

The Fake Investment

are no alleviating circumstances in the action of
his

cursedness.

If there were a stronger

than cursedness, I would use

He

it.

word

has not even

who commits crime

the excuse of the degenerate,

because of uncontrollable passion, or under great

mental or physical provocation.

This criminal of alleged respectability deliberately ruins that he

need,

may

receive

what he does not

superabundance of wealth.

cannot always reach him, and he

will

The law
continue to

and to flourish, so long as both society and

Church refuse to take the trouble to discriminate, and to investigate not only the personal
character of their members, but, what is of far
more consequence, their business character.
The immoral man, bad though he is, injures
few beyond his personal reach but the fraudulent
promoter and business fakir ruin towns-full of
people, debauch legislatures, and are a public
exist,

the

menace.
Until

alleged

spectability,

how

respectability

becomes real

re-

and people forget dying in learning

and take an interest in politics and

would appear to be but one way
to offset this growing evil, and that is to tell the
public the truth about it, that the public may, if
to live,

citizenship, there

it

will,

no longer

rest in the peaceful sleep of

ignorance.
[

187

How

Save Money

to

The schemes made and promoted by this class

of men are complex and cunning.
The man of
and

sense

unless he has

discretion,

subject and has lived close to

how

not readily understand

human

studied the

nature,

may

these financial sharks

are able to swindle and re-swindle the people.

He

does not appreciate the standard ignorance and

credulity of the public, and probably has

experienced the

insane

desire

to

get

not

rich not

only quickly, but instantaneously, at the least possible

expenditure of time, thought, energy, and

money.

So anxious are the people to get something for

nothing, or to get

one could finance

itself to

much for little, that I believe

a company which would bond

pay the running expenses

of the national

government, by means of a lottery, the lottery to

be conducted on the square, and not as fake financial

schemes are manipulated.

The gambling-table
istic

of our people,

and

instinct
it is

is

still

character-

being encouraged and

abetted by nearly every class of society.

The

progressive whist party, the bridge table, and the

grab bag, on account of their alleged respectability,

are doing

much

to instil into our children

the love of chance, and to give them a foretaste

of the excitement of gambling.

feel

that they are doing more

[188]

am

inclined to

harm than that

The Fake Investment

which comes from the pool room or the policyshop.

Respectable wrong-doing

than

is

An

is

more treacherous

any other form of crime.

ounce of respectable sin weighs more than a

pound of police-court criminality.

The tendency of to-day is to get something with
the least possible effort and expenditure, to take
speculative and gambling chances. With the full
knowledge that these conditions exist everywhere,

in the store, in the factory, in the

even in the school and Church,

fakir casts his net

of foolish

and

home, and

the financial

pulls in a straining load

fish.

The country

is

flooded with flaming advertise-

ments of mining and

appear to

offer

other

everything

companies,

which

and to guarantee

everything, when, as a matter of fact, their guarantees are worth less than the paper

upon which

they are written, for the paper was worth some-

thing before the advertisement was printed upon

it.

It

ments,
lars,

is

obvious that these expensive advertise-

many

of them costing thousands of dol-

would not appear

they would not pay

if

if

they did not pay, and

the people did not read

them and buy the things advertised.

One of the most conspicuous swindlers of the
day is the so-called mining company, with or

[189]

How
without a mine.

Save Money

to

many

In

of superb, but leased,

cases its assets consist

furniture, well-dressed

office

and magnificently printed prospectuses.

There is usually a legal title, or option, to some
land, perhaps a large tract,
enough to make a
good appearance upon large-scale maps and serve
clerks,

as the physical basis for imaginary descriptions.

my

In

opinion, ninety-nine out of every hun-

dred of these heavily advertised companies offer

neither investment nor business propositions

be-

cause no mines are located on their properties, or

else,

mines do actually

if

unprofitable, or are too

railroad

Many

for

ore

exist,

they are either

far removed from the

be handled to advantage.

to

of them are located near a well-known and

and the promoters claim that this

proximity to an ore-bearing district is evidence
profitable mine,

of marketable ore.

This statement

and could not be borne out

an ore-bearing mine
than scattered
its

ore.

may

in fact.

fact that

illogical,

not insure anything more

Good mining

deserts as well as its oases.

The

is

Proximity to
territory has

Ore runs

an alleged mine

is

in veins.

near a good

mine, must not be considered as more than very

indirect evidence that the property

is

ore-bear-

companies

actually

ing.

Occasionally

fraudulent

own mines which are capable

r

190

of producing enor-

The Fake Investment

mous

quantities of

good ore; the mines may be

genuine, and the quality of the ore be substan^

tiated

by

reliable analysis

but in most cases these

mines are located away from the railroad, where

the cost of transportation forbids possible profits.
I recall a promoter
nity,

He

who came

who invaded my commuand who conquered.

to conquer

was of prepossessing appearance,

fitted

his clothes

him, his watch chain was not too large for

a gentleman to wear, and the diamond in

pin was of modest dimension.

moderate
ter

in his statements,

who would introduce

if

he gave himself a bet-

exaggerate.

the devil to their daughters

class of society

shirt better

members
who consider a

he were in evening dress,

growing

his scarf-

appearing to be

He was well
There are alleged respectable people

opportunity to

introduced.

By

than a spotless character.

ceived an audience.

He

of that
spotless

He

re-

brought with him samples

of ore and photographs of his mine, accompanied

with authentic assayers' reports.

Investigation

showed that he did not exaggerate the ore-bearing

capacity of his property or the quality of the ore.

Hundreds of men, including many who knew

enough to know better, were ready to put money
into his mine, and would have done so if it had
not been for the shrewdness of one of them.

was acquainted with a man who

L 191 J

He

lived within fifty

How

He

miles of the mine.

The

wrote to him, giving him

and requesting telegraphic

full particulars,

mation.

Save Money

to

infor-

following message came over the

wire:

" Big mine.

Lots of

Would

ore.

take train

of bald eagles to lug ore to railroad."

Here were both quality and quantity.

The

pro-,

moter did not misrepresent or exaggerate, so far

as the ore was concerned. Legally he could sub-

had made; but

stantiate every statement that he

he intentionally forgot to inform the would-be investor that his mine could never become profitable

because of

you

If

location.

its

will

read carefully the prospectus of the

average mining scheme, you

it

apparently

antee

will find that, while

the truth, and appears to guar-

tells

everything,

it

irresponsible,

legally

is

probably written by an expert who knows how to

juggle words, and who has the ability to make

nothing read

seem

like

like

something, or to

The prospectus

has, as a rule,

say about property

in

little

pictures, which

It

it

deals

does in presents; what

it

it

more

192

in futures

apparently says

actually says
[

to

and

with

is filled

may and may not come from

photographs

posed to what

much more

general, than about the

property owned by the company.

inal

make a

lot.

it

orig-

than
is

it

op-

does not

The Fake Investment

much

really say

of anything, although

yes, in nine
is

appears

it

In nine cases out of ten,

to cover everything.

and nine-tenths cases out of

a doctored document,^

ten, it

typographical fool-

catcher.

careful analysis of the average mining prop-

would appear to furnish sufficient proof

any sane man, or to any man with half-sense,

osition

to

that there

is

no basis for investment.

fortunately, sane

men and men

But, un-

of half-sense, or

with even quarter-sense, do not

consider these

schemes, and take no pains to warn the public

against them.
all-fools

acquired

They

are

left,

therefore, to the

or half-fools, who, through natural or

ignorance,

everything

allow

avarice

to

outweigh

else.

The camera is a very obedient servant, and

makes a specialty of being accommodating. It
will make a picture of anything you want it to,
and, if you treat it well, it will not show discrepancies.
Most of the photographs picture
action, and are either fixed-up to represent the
grossest exaggeration, or else are not taken upon
the property owned by the company. A good picture can be made of a very poor thing, if the
photographer knows his business or a good thing
;

belonging to somebody
in

else

an advertisement.
r

193

may

be substituted

How
An

Save Money

to

honest, reliable, and high-class mining ex-

pert delivered a

recently

lecture

While holding

enterprises.

in his

upon mining
hand the pros-

pectuses of three mining companies, each one of

which was a superlative example of the printer's

art, he said:

" These companies are said to be located in

Blanktown. The prospectuses give them an aggregate valuation of

million dollars.

five

They

are selling their stock for ten cents a share, and

they guarantee that

it

mayor

of

will

be worth a dollar a

I live in Blanktown.

share within a year.

Blanktown.

am

am

president of the

Blanktown National Bank. I never heard of one

of these companies, and yet I am supposed to
know as much about my town as does anybody
who lives in it. Blanktown has a population of
less than twenty-five hundred, and yet it appears
to be possible to hide five million dollars' worth of
property so securely that the mayor and the
president of the bank have no suspicion of its
existence."

a fact that much of the mining stock advertised is not worth the printing of the certifiIt

is

cates,

and I think I may say with safety that

practically all heavily advertised stock

primarily

and

fraudulent

questionable value.
[

194]

worthless,

is

or

either
is

of

The Fake Investment

Many

a company pays a dividend, or appears

to do so, the dividend coming out of the

paid in for stock.

The

money

buyer receives

foolish

part of his money back in the form of dividends,

the dividend not representing the earnings of the

company.
It

is

easy to pay dividends, and even large

when the stock is selling rapidly and for

enough money to allow a reasonable amount of it
to be used for bait. The only dividends good for
anything are the earned dividends. Any promoones,

ter

can pay large dividends,

comes

in

from the

proportion of

it

if

enough money

sale of the stock to allow

to be used for the purpose.

For

example, you pay a hundred dollars for stock, and

the promoter

still

makes money

if

he gives you a

same time dangling

the bait of a dividend-paying investment, which
you and your friends are eventually sure to bite.
dividend of half of

it,

at the

In other words, he gives you back half of your

hundred

dollars,

and swindles you out of the bal-

ance only, in order to establish confidence.

I have already tried to explain the

reasons

which permit the fraudulent promoter to prey

upon people, and

to do

continuously, but the

it

following story illustrates them.

A
ing

scheme-promoter and
at

the

club.

his friend

Between puffs

[195]

were smok-

of

fifty-cent

How

Save Money

to

cigars, which manipulators can afford to smoke,

the following conversation took place:

" Mr. Blank," said the friend, "

how under

the

sun do you manage to unload the stock of your

company, when every sensible man knows, and you

know, that your property is not worth one per
cent of what you claim it is and you know, and
;

I know, that

it

can never earn a dividend?

It

is

a fake, pure and simple."

The promoter

consciences are iron-covered.

satisfied,

They

them.
"

and

My

are too well

and making too much money, to be

provoked, even at the truth.

them,

Promoters

did not get angry.

Their faces are metal-plated, and their

never do.

it

does

not harm

Throw
them

truth at
if

it

hits

friend," replied the promoter, " step to

the window and count a hundred passersby, and

tell

me when you reach

the hundredth one."

In a few minutes, the required number of people

it

had passed the window, and the friend reported

to the promoter.

" How many of them, my boy," said the promoter, and his eyes twinkled, " how many of the

hundred you have just counted really think for

How many of them know anything
themselves.''

beyond what they have to know?"

The friend puffed silently, and watched the
[

196

The Fake Investment

rings of smoke ascend

and disappear.

Then he

said

" I should think about one

less

possibly a

little

than one."

Arising, the promoter slapped his friend upon

the back and exclaimed, " I

sell

my

stock to the

ninety-nine plus."

Some

of the claims and statements

made by

ex-

ploiters are so extravagant, so obviously untrue,

so sublimely exaggerated,

and often

so intensely

humorous, and, mark you, so successful as they

run, that they furnish indisputable evidence that

a proportion of the great middle class of people

have brains, judgments, and understandings made

up

of streaks of sense running parallel to streaks

of idiocy.

Recently a projector succeeded

siderable stock in a

in selling con-

company which

either

was to

operate, or which merely claimed to be going to

operate, a cat ranch.

The announcement of the
company, printed upon coated paper, between

illuminated covers, read that the promoter would

collect a million net cats.

This brilliant statistician

and mathematician, basing his diagnostical statements upon the scientific attainments of the ages,
assumes, without allowance or reservation of any
kind, that each cat would average twelve kittens

a yeai.

At

the end of the

[197]

first

year there would

How

to

Save Money

be on hand a stock of one million original cats

plus the cumulative dividend of twelve million kittens or cats,

a net

can

sell

stock of thirteen million cats

The promoter guarantees that he

of diverse ages.

each white skin at ten cents, and each pure

black skin at seventy-five cents.

the future

is

His knowledge of

so unassailable that he estimates that

the twelve million skins will

sell

at an average of

making a revenue of about ten

a day gross from cats killed, at

thirty cents apiece,

thousand dollars

the same time reserving one million cats for stock-

ing-up purposes.

The promoter

assures

the

prospective

pur-

chaser of stock that one expert man, or that one

and a fourth expert women, can skin fifty cats a

day at a wage of two dollars. Consequently it will
take a hundred men to operate the ranch, giving
a net profit of nine thousand eight hundred dollars

per day.

He

proposes to establish a rat ranch next door,

where a good grade of rats

will

be raised as food

for the cats.

Rats multiply four times as fast as cats, therefore one million progressive rats will furnish four
rats per

day

moter, who
fellow

no

who

is

for each cat.

This wonderful pro-

probably the great grandson of the

tried to discover perpetual motion, has

difficulty in

providing for the physical care of

[198]

The Fake Investment

the rats, because the carcasses of the cats are

not sold with their skins

cats

is

hence what

is left

of the

eaten by the rats, allowing a fourth of a

cat for each rat per day.

by the

It will be seen, even

dullest investor, that

the business cannot help but be self-supporting

and automatic. The cats will start in by eating

the rats; and the rats, before and after being
eaten by the cats, will eat what is left of the cats
and the company will get the skins.
While this idea is not strictly original,
being
only a method of realizing financially upon the Kilkenny cat theory, the promoter fails to carry it

far enough, and moreover, shows great biological

ignorance, because he does not skin the rats before

waste

giving their left-overs to the

will

cats.

undoubtedly be remedied, and

will

This
dou-

ble the value of the stock.

Prospective buyers are earnestly requested to

telegraph their orders,

likely to get

mous

otherwise they

an opportunity to share

are not

in the enor-

profits of the concern.

Ridiculous as the foregoing scheme seems to be,

the assertions and figures are taken directly, in

a condensed form, from an announcement actually

sent out to the people,

and presumably bringing

returns.

There

is,

and must

be, a reason for everything,

[

199

How
and

all

things permit of logical conclusions.

the property
it

Save Money

to

as valuable as the

is

If

promoter says

do you think there would be any need of

is,

such strenuous pushing for the selling of the

stock?

Our

Money

likely that the

would

tion

are

centres

financial

money.

is

owner of a

find

much

necessary funds for

with

flooded

plenty and cheap.

really

difficulty

good proposiraising the

in

development from the men

its

who have money and who are anxious

it?

Would

if

to invest

and elaborate

extensive advertising

prospectuses be used,

idle

Is it at all

there were sufficient in-

trinsic value to speak for itself without the flaring

Would

of typographical banners?

the promoter

sell stock for less than what it is worth,

worth what he says it is worth?

No,

The promoter

advertises

if it

he

that

was

may

reach the fools, because the fools will buy anything.

It

may

not be generally known that the great

miners of the country employ a class of employees,

known as " detective workmen," each one being an

When

experienced miner.
ered,

a new mine

is

discov-

and trained miners have some reason to

believe that there

is

something in

workmen obtain positions

They easily discover
miners.
tive

200

it,

these detec-

there as working

the worth of the

The Fake Investment

mine.

They report

they say

is

to their employers.

men who know how to weigh mining

up the mine or become interested in
stock

is

If

what

favorable, regular mining investors,

seldom

buy
and the
ever advertised more than

if

values,
it,

moderately.

The great mining

America are able

good mines, and these mines

interests of

to take care of all the

are not likely to be offered to the public at less

than par.
I think that

practically

than par
it is

in

is

we may

all

set

it

down

as a fact that

mining stock advertised at

worth nothing, or very

less

and that

little,

every respect an unsafe investment.

So far as

my

experience and investigation go,

I declare emphatically,

and without

qualification,

that I never knew of a profitable or valuable min-

ing stock, or any other kind of stock, which was

offered at a few cents on the dollar or

was more

than moderately advertised.

I

consider the heavy advertising of stock at

below par, or extensive advertising of any stock,

as reasonable evidence of probable fraud.

Further, I would advise every investor to keep

away from any

it

stock, where the advertisement of

announces that the price

will

thirty days, or within

any other

Legitimate stocks

or

rise
[

201

fall

be raised within
specified time.

because of the

How

Save Money

to

demand or lack of demand for them, as well as

by their intrinsic value, and the date of this
change cannot be set by any financier, or by anybody else, for nobody can foresee the future
value of any stock. If the stock is going to be
worth much more in thirty days, is it not obvious
that the promoter himself, or his friends, would
purchase the whole of it, and not be philanthropic
enough to accommodate the public by allowing it
to come in?
I would advise every investor to shun any kind
of stock or investment the announcement of which
suggests philanthropy or the desire to benefit the
public.

I believe that

any statement

in

an adver-

tisement to the effect that the promoter wants to

do good, to share his profits with the customer, is

prima facie evidence of intentional, premeditated
fraud.

Further, I consider any statement to the effect

number

that a limited

of shares will be sold to

one person as of fraudulent intent, and should be

so considered.

Business

about
sell,

it.

is

business,

The

seller

and there
sells,

is

no sentiment

because he wants to

and he cares nothing about the buyer.

Keep away from any company which claims

let you in on the ground floor.
This position
occupied by the promoters, and the public
r

202

to
is
is

The Fake Investment

lucky

if it

because

gets on to the roof,

it is

Upon

unlucky,

rather,

a tumble.

likely to take

general principles,

it is

well not to pur-

chase any advertised investment, unless the advertisement

is

moderate

in tone, is small in size,

and

bears the signature of a thoroughly reliable bank-

ing house.

Before investing in mining, or in any other

stock, I advise

you

to protect yourself

by

inves-

tigating along the following lines

up the reputation and

standing of the promoters and others connected
with the company.
Probably most of them are
unknown or little known, and a close investigation may show that some of them have been under
indictment and have figured in the criminal courts.
Occasionally, the names of good men appear in
In the

look

first place,

the announcement.

because

many men

This

is

often accomplished,

of character are ignorant of

business ways, and are, therefore, an easy prey

to

smooth-tongued

and broadcloth-clad

adven-

turers.

name

of a lead-

ing divine in the company's directory.

Probably

Occasionally, you will find the

and has been led into doing that

which he would not have done had he known the

he

is

sincere,

truth.

I would advise

you

to

beware of any announce-

[203

How

to

Save Money

ment containing the names of clergymen, doctors,

or other professional men, no matter how honest
they may be. As they are not good business men,
they

may have

been inveigled into allowing the

The very appearance of

names may be considered an evidence of
fraud.
Their innocence and ignorance do not
offer you any protection.
Carefully analyze the names of the officers and
directors. Some of them may be billed as follows
" John Blank, of the great firm of John Blank
and Company." It may have but a bare existence.
use of their names.
their

The

fact that one of the directors

dent of a bank

is

is

the presi-

insignificant, unless the

bank

is

of high financial standing.

There are many banks and trust companies,

which are unworthy of public confidence, and are

but accessories to swindling schemes.

Positively refuse to invest in

any stock unless

company is officered by men of solid reputation, men of unquestionable character, men whose

the

reputations

are

above par.

But even then

nght

You

have no

to take speculative chances, imless

you are

would advise you to be cautious.

a professional investor.

Before purchasing mining or other kinds of

stock, I suggest that you call upon the president
and cashier of several reliable banks or Institu[204]

The Fake Investment

Request these men to read the

tions for savings.

prospectus issued by the company, and ask them

for information regarding the stock as an investIf all of them, or

ment.

highly of

for purchasing
if

it,

most of them, speak

then you will have some justification

it,

it

but I would advise you to drop

even one of these

men condemns

it.

Give no weight to the financial opinion of any

professional man, unless he has a reputation for

Rather depend upon the ad-

financial sagacity.
vice of business

business

man

men, and do not. allow any one

to settle the matter for you.

If an investment

good for anything, there

is

are, at least, half a dozen first-class business

men,

who will not only advise you to buy the stock, but
who have purchased it themselves for investment.
Pay absolutely no attention to any claim made
by a promoter. Purchase nothing unless several
business men of character and standing would,
without qualification, advise you to make the investment.

But be careful not

friendly to

to interview people

the stock, because they

who are

may

employ of the promoter.

investigation may show that the stock

be in-

directly in the

is

little

selling

on the street at a much lower rate than that asked

for

it

at the company's

Think a

little.

office.

How many
[

205

people do you

know

How
who have made a

Save Money

to
cent

by buying mining stock or

other advertised investments?

to the

names given

How many

am

not referring

in the gilt-edged prospectuses.

people do you actually know, directly

or indirectly,

who would repeat

their experiments

in stock-buying?

The buying and selling of stock belongs to

to men who can afford to lose, and
who are able to take speculative chances. Even
financiers,

if

the opportunities of success were a dozen times

greater than they are, I would advise the small

away from

investor to keep

Allow your good sense to

to take

command

enough of your

stocks as they run.

rise to the surface

of your pocket-book.

folly,

as none of us are without

you must have some,

to hold your money

for
it,

and

Suppress

in safe keeping.

Even the crudest common

should know, that,

promoter reports

it

to be, it

knows,

sense

the stock

if

is

as

or

good as the

would not be sold for

a few cents on the dollar or at bargain prices,

when the safe deposit boxes of the world are overflowing with unused money.
If the

mine owner has not

sufficient

develop his mine, and his mine

would

it

is

money

to

a good one,

not be more profitable to obtain money

where money

who know how

is

cheap, from

to manipulate
r

206

men

of money,

money, than

it

men

would

The Fake Investment

be to spend thousands, and hundreds of thou-

and for

sands, of dollars in advertising the stock

extravagance in selling?

Another good way to find whether or not the

stock is good for anything is to ask the promoter
to give

have

you the names and addresses

purchased

months previously.
sell,

three,

of those

or

six,

or cor-

Visit these people,

and, also, whether or not they

would buy any more stock at the present

As

the

man

who
nine

Find out whether or not they

respond with them.

are ready to

stock

the

without friends

prices.

hardly a man, so

is

the investment without high-class recommendations

is

unsafe and unworthy of consideration.

another excellent way to test the invest-

Still

ment value of any stock, or other

security,

ask the president, cashier, or other

conservative bank, to loan

ask him

if

it

to

of a

that

is,

he will take this stock as collateral

par value, or at

either at eighty per cent of its

official

money upon

is

much lower per

cent.

No

stock

is

worth buying,

to hold as an investment, unless leading bankers

will receive it as collateral for at least seventy-five

per cent of
Still

its

face value.

another good

way

or write to, the promoter's

of testing
office

selling price of the' stock, then,

of a friend, ask

this

is

to call at,

and ascertain the

under the name

same promoter what he

[

207

will

How
give

you for a

stock.
is

Save Money

to

certain

number

of shares of the

Let us suppose, for example, that the stock

offered at ten cents a share,

moter states

positively that

it

dollar a share within a year.

and that the prowill be worth a

If this be the case,

it is

obvious that financiers would buy up the en-

tire

issue,

and that the promoter would gladly

buy back the stock

at a price very

than

little less

Try him and see, and

pay you one

the selling price.

chances are that he would not

a share for the stock he

is

selling

you at ten

a share, unless he knew you were making the

the
cent

cents
test,

and purchased a few shares for advertising purposes.

Under

the

chapter

heading

of

" Industrial

Stock," I have attempted to warn the reader

against another important class of fraudulent investment.
class

of

Every kind of property, and every

is
dishonestly promoted by

business,

swindlers, but the majority of questionable and

dishonest companies handle mining,

oil,

land, and

largely because, perhaps,

industrial properties,

these kinds of property lend themselves to highly

colored descriptions and greatly exaggerated state-

ments.

True, the savings bank and the bond pay a

very low rate of

interest,

208

but sure

little

Interest

Tlie
is

Fake Investment

worth more than unpaid great

interest.

Better

receive little interest, than risk

your principal for

big interest.
" When in doubt, don't,"

a pretty safe rule

to follow.

[209]

is

How

Save Money

to

CHAPTER XXIII
OWNING A HOME

THE

chronic materialist labors under his

self-

generated delusion that there can be no home

worth having, unless the occupants of

title

to the purely material part of

tumultous

of

feeling

it

hold clear

it.

He

has

grief-showing-sympathy

for the flat-dweller and boarding-house inmate.

Upon

the lecture platform,

or upon the stump,

if

if

he be an educator,

he be a politician, he

tells

the people that the strength and integrity of the

nation are vested in the home-houses of

ple.

He

its

peo-

has forbidden the millennial sun to peep

over the earthly horizon until every family

is

separately housed and owns a piece of land with

a building upon

it.

While I would not minimize the intrinsic value

of the material home, and the paid-for homehouse, while I believe that one

is

a home of his own, and while I

far better off with

feel

assured that

separate houses are preferable to collective abodes

like flats

and boarding-houses, I am not

willing,

as yet, to bring myself close enough to earth to

refuse to believe, and to

is

as

much

feel,

that the true home

of a spiritual and mental affair as

[210]

it

Owning a Home
IS

materialistic,

and that

It

Is

not,

therefore,

upon physical conditions or environment. Undoubtedly the combination of the right kind of spiritual home with the
necessarily, wholly dependent

material house produces a far better result than

hope to

either can

offer

The home-making

by

spirit,

itself alone.

even though

manifested in the materialistic,

is

it

may

be

to be encour-

aged by Nation and State, and by every individual

who would help

the present and provide for the

future.

Probably the healthiest and best material form

of a

home

is

a detached house, with

its

own

in-

dependent yard, provided that sanitary and other

necessary conditions are satisfactory.

It

is

ob-

vious that this kind of a residence cannot exist

in the heart of a great city,
In

either

but must be located

the suburbs or the country.

fact, unfortunately, that business

and

It

earning conditions force millions of people to

in large cities,

and

will

is

livelihood-

not permit them to

live
visit

the country except at occasional Intervals.

There appears to be no good reason why every

one should not strive to own and occupy, or to
occupy without owning, a separate and independent house and yard, provided that they are
not off-set by inevitable disadvantages, by local
conditions,

and by distance and

[2111

travel,

How

Save Money

to

Fathers and mothers have rights, and

all

of

these rights should not be always sacrificed for

the

Where

children.

should be divided up
the family, that

it

sacrifice

among

may

not

the

all

fall

necessary,

is

it

members of

wholly upon any

one of them, except where there

sickness or

is

constitutional weakness.

Although I am opposed to the bringing up of

flat, or in any other closed-in
apartment, I have little sympathy with the sentichildren in the city

mentalist,

who would

drive

the

hard-working

father into the distant suburbs or country, with

poor transportation
quires his early

and

facilities,

when

his

work

late presence in the city.

health of the bread-earner

is

re-

The

as necessary as the

health of the children, and both should be considered.

Bad

as the city flat

it

is,

is

people, and some families, than

home,

not

better for some

is

the suburban

better in itself, but better because of

peculiar and unfortunate circumstances.

City

has some advantages, and the

life

dweller can often die of old age,

if

can be healthy almost anywhere,

proper care of
matters
ment.

is

flat-

One

he

will.

if

one takes

Attention to personal

oneself.

as important as satisfactory environ-

The

healthiness

often over-estimated.

of the open country

is

City water, polluted though

[212

Home

Owning a
it

may

be,

purer than that coming from the

is

average country

The sanitary

well.

The

open country.
It

city

man

better, therefore, for

is

conditions

than those

in the city are usually better

in the

nearer his work.

is

some men to be

flat-

dwellers, provided they can reside in a respectable

part of the

city,

than

it is

for

them

to spend a

large portion of their time in uninteresting travel,

always in crowded and poorly ventilated cars,

and invariably at the sacrifice of time and comfort.

But

would enthusiastically recommend the

suburban

or

suburban

flat,

cause,

country home-house, or even the

to those

upon general

open country,

especially the
city block
is

who can maintain

and

it,

principles, the country,

street,

is

be-

and

preferable to the

and certainly the country

the place for children.

But do not forget that your family can

almost anywhere,

if

they take the proper care of

their physical bodies.

more
Folk

thrive

Care of the body has much

mere surroundings.
every community, and under

to do with health than

live

and

die in

all conditions.

But

give the suburbs or the country

the preference.
It is obvious that the city

cannot own

man

of small income

either a flat or a city residence.

would have a home-house of

[

213

his

If he

own, he must

lo-

How

to

Save Money

cate in the suburbs or in the country.

obvious that the young married

It

man

is

also

especially

does not have the ready cash for the full purchase
of a modest home.

He must

either wait a con-

siderable time, or obtain his house

and land on

mortgage.
Is it better to wait until one is able to

own a

home

of his own, or to live in a mortgaged house?

Whichever way may be preferable, it is a fact
that probably ninety-five per cent of the residences
in the city or

near the

city,

and that

fully sixty

per cent of the country homes, are either under

mortgage or were obtained with the aid of a mortgage. So universal is this custom, that it would
be difficult to argue against mortgaged homehouses.

Economists of every

class,

and most of our

leading philanthropists, are almost unanimously

it is better to have a home-house that
mortgaged than no home-house at all, provided the cost of carrying the mortgage is not

agreed that

is

burdensome.
It

is

easy to place upon a house a mortgage of

from sixty to

seventy-five per cent of its real or

selling value,

and savings banks, or other con-

servative money-lending institutions, are looking

for chances to lend

money on good

real estate,

never realizing a rate of interest over six per

[214]

Home

Owning a
cent,
is

and usually only

five

per cent,

if

the security

satisfactory.

In

New England, and

money can be had

other parts of the East,

at five per cent, six per cent

being required in some Western and Southern

lo-

calities.

Let us suppose, for example, that a man, with

a family and a fair income, has
to

pay from

of a house

sufficient

money

thirty to forty per cent of the cost

and land.

advise him to

make

Most assuredly would

the purchase of this home-

house, allowing a mortgage not exceeding seventy

per cent to be placed upon

it.
I would prefer a
mortgage of not over sixty per cent, provided, of
course, that the owner intends to remain per-

manently

in town,

and that the location

selected

is

not likely to deteriorate in value.

I do not advise any one to submit himself to

a mortgage so large that he has no real equity in

the property.

While the manipulation of

the practice

of

real estate, next to

agriculture,

is

said

to

basis of wealth-getting, real estate, both

bad, cannot usually be disposed of at

is

not negotiable

class

stock,

good tenant.

nor

it

Many

will.

It

a bond or a share of high-

like
is

be the

good and

easy to

let

a house to a

a desirable place has re-

mained vacant for months and years, and from

[215]

How

Save Money

to

ten to twenty per cent of the people

who

houses either pay slowly or do not pay at

I

hire

all,

would recommend most emphatically the pur-

chase of a home-house to any one with a family,

or with a prospective family, provided he

and

manently located,

able

is

to

is

per-

assume the

It is certainly a good way to inmoney, and the money remains where

responsibility.

vest one's

he can see

courages

feel

it,

it,

and

thrift,

and

with

live

adds

to

it.

It

character

en-

and

stability.

Hundreds of thousands

of families are living

under the instalment payment

in houses obtained

Each month they make a payment of an

amount which may not be much more than the
This money reverts to
regular rent would be.
the principal, so that when all of it has been paid,
plan.

they

will

have a clear

arrangement

may

title

to the property, or an

be made whereby a deed

will

be given after a certain number of payments have

been made, the balance to be held on mortgage.

This

is

an excellent way to obtain a home-house,

provided one

is

his obligations

reasonably sure that he can meet

but

it

never should be taken ad-

vantage of by those whose incomes are both small

and intermittent

nor should

this

arrangement be

entered into under any forfeiture clause in the

agreement which

forfeits to the

[216]

purchaser

all

the

Home

Owning a
money he has paid
his

in if

he does not make

of

all

payments.

So popular has become

ing a home that

method of obtain-

this

has been taken advantage of

it

by land speculators and land sharks, who have

been able, by extensive advertising, and by every
form of misrepresentation, to swindle the public
out of millions of dollars.

cheap land

plan

attractive

and

laid out,

They

usually purchase

good land.
drawn, with modern

in the vicinity of

all

is

very

streets

Many

necessary improvements.

of these streets and improvements remain upon

Lots are sold at an apparently low price,

paper.

and upon instalments, often a sum as small as

five dollars being sufficient for the first payment.

Then

the

land

manipulator

house at a stated price, which

more than the house

is

offers
is

worth.

to

He makes

proposition attractive by offering to

what he

calls

easy terms.

build

almost invariably

The man

sell

the

on

it

of moderate

income jumps at the bait, and because he can

afford to

pay a few

dollars a month, he eventu-

ally finds himself obligated to either lose

has paid in or pay from twenty-five to

cent

more than the property

The

principle

of

is

instalment

what he
fifty

per

worth.

home-buying

thoroughly legitimate, and certainly offers

is

many

advantages to the salary-receiver or wage-earner,

[217]

How

Save Money

to

provided he keeps away from land schemes, from

boomed

and avoids

land,

all

property which

is

not well located.

I would advise

him to have nothing whatever

to do with over-advertised property, with land

boomers of any

class,

property

the

unless

is

thought well of by conservative real estate men

who have no interest in

Never buy any real
land with a house on
at least

two

estate.

estate,

vacant land, or

you have consulted

business men, who are real

it,

first-class

estate owners,

it.

until

and who are able to appraise

real

Never take the unsupported word of the

man who

has the real estate to

Officers of

sell.

savings banks are usually well posted

upon

real

estate matters.

Many

people build their houses, borrowing the

money in advance of the erection of the building.

They own the land free and clear, and the borrowed money is paid over to them as the building progresses.
Under this arrangement they
pay interest on the whole amount borrowed, or
to be borrowed, even though the building

be completed for several months.

pay one per

cent

more

interest,

loaner takes a greater risk.

against this
is

plan.

frequently the best

It

has

way
[

218

I
its

am

may

not

Usually they
because

the

not advising

advantages, and

to obtain a home-house.
]

Owning a Home
While I am very much opposed to indebtedand while I believe that a man who is free
and clear has a better chance to fight the battle

ness,

of

life,

I feel reasonably sure that the home-house,

with a mortgage upon

house at

it, is

better than

no home-

all.

mortgage of

on a piece of property,

fair size

which the mortgagor can handle without undue

pressure, need not be, and should not be, a stum-

bling block in the

way

of success-making.

It gives

him the opportunity of maintaining a home of

own, and this should be an incentive to save.
There are few better or safer ways for the
vestment of money than to place

it

his

in-

home-

in a

house, provided the location and other conditions

are right.

When

one has his money invested on his own

premises, he sleeps
rives a benefit
let

him be

hasty.
likely

very

from

careful.

upon
it

other than financial.

not good, or

is

one

de-

But

and

entail

if

it

is

may

be a

considerable

loss.

deteriorate, his investment

poor

he

Better be overcautious than

If the location

to

his investment,

Changes are always occurring and many a good

become a poor one within a few

good neighborhood cannot be guaran-

location has
yearSi
teed.

A
The

erection

tory, near by,

may

of a

garage, or of a fac-

injure the adjoining property

[219]

How

Save Money

to

by the

to wipe out the equity held

sufficiently

owner.

The

value of real estate

is

dependent upon

its lo-

and the worth

of the building is dependent as much upon its location as upon the cost of its construction for example, a brick business block, costing one hundred
thousand dollars and located in a purely residential
district, would not be worth anywhere near as much
as it would be if on a business street.
A tencation and the adjoining property,

thousand-dollar

would not

sell

residence,

for

in

much more

small

in the

village,

open market

than would a house costing half that amount.

palace in the wilderness

more in
camp on

may

dollars and cents than

the other side of the

hill.

is

the hermit's

What you pay

for building a house does not necessarily

value, for the location of the house has

do with

not be worth any

fix its

much

to

it.

In purchasing a home-house, then, you should

consider, not only the cost of construction, but

the present and future value of the location.

While I would advise a man of family, or of

other dependents, to purchase a home, or equity
in one, provided he can afford the expense, and
his

income

to put

all

is

well assured, I

of his

money

would not advise him

into real estate, either for

a home or for an investment.

[

220

Home

Owning a
Is

not good judgment to put your last dol-

lar, or

near your last dollar, into any piece of

It

you without ready

property, for

it

will

funds, and

is

not safe to be without ready

it

leave

money.
Let us suppose, for example, that you can afford to carry a three-thousand-dollar home-house.

you have only one thousand dollars available

cash, and it is necessary for you to use the whole
of this money for the first payment, I would advise you to wait but if you have from fifteen hundred to two thousand dollars in cash, you are
If

probably

in

a position to put a thousand dollars

into a home-house, the balance of

be kept where

it will

your money to

be available.

For

the

man

of family should carry some ready cash to meet

emergencies, and he should never lock

his

money where

it

up

all

of

cannot be easily and quickly

realized upon.

No

matter how much your equity

may

be in

the house itself, it is difficult to raise money upon

mortgaged property without paying a premium
and without considerable delay. Cash in hand is
the only thing that will meet emergencies, unless

one has much property or extensive credit.

ter be without a

Bet-

home-house than without ready

money.
Again,

let

me impress upon you

[

221

the necessity

How
of

making a

Save Money

to

full investigation of

the locality, and

any

of other conditions, before purchasing

and, further, have the

estate,

real

carefully ex-

title

amined by a good lawyer, or guaranteed by an

insurance company.

Hundreds and thousands of people have lost

their all by purchasing home-houses, and other
real

estate,

because of unforeseen

and bad titles. Of course, certainty

and we must take some chances
gent and persistent investigation
prevent

Do

depreciation
impossible,

is

but

intelli-

likely

is

to

loss.

not depend upon yourself.

in the real estate business, or

real estate,

Unless you are

own considerable

you cannot possibly be able

to ap-

much accuracy. Consult

who know but who are not financially interested, and do not depend upon the advice of
any one man.
praise property with

those

Do
house

not imagine that the ownership of a homeis

going to make a success of you.

elements of success-making are composite.

The
The

home

helps,

You

are better oif without a home-house than

and so do

all

other right conditions.

with one when you cannot afford to have one;

but the right kind of a

and profitable home

man

will create

anywhere

conditions.

[222]

and

a happy

under

all

Owning
The home
lack of

it

Home

spirit in a flat is

worth more than the

in a palace.

The home

of

good cheer and good

will,

on the upper floor of a dingy city block,

better, and contributes

man, than does the

garden of

more

loveless

located
is

far

to the up-building of

house resting in a

roses.

The man and

the

woman, not the house, make

the home.

223

How

Save Money

to

CHAPTER XXIV
LIFE INSURANCE

ALTHOUGH
one

is

about

it

the question of

mighty

of

show the greatest

life

consequence,
diversity,

insurance
opinions

and are con-

tinuously subjected to periodical change; therewell to

fore, it

is

that we

may

burn our bridges of prejudice,,

look upon

insurance as a definite

life

and necessary commodity, and recognize it as a

means of protection, possessing its own peculiar
and exclusive advantages.
The past and present investigations of life insurance companies, and the many scandals and
irregularities

which have been unearthed, have

turned the searchlight of truth upon one of the

largest of our commercial enterprises.

Probably nothing
tive of

everyday

life,

much comment and

it;

in business,

and representa-

has been subjected to so

criticism,

both for and against

but even the most bitter enemies of

life

ance, or rather of the methods followed

insurance

insur-

by

life

companies, find themselves forced to

admit that,

if

life

insurance had not earned a

rightful place in the

economy of home and busi-

ness

did

affairs,

if

it

not possess

[224]

in

large

Life Insurance
measure the essentials of a commodity,
were not well-founded reasons for

there

if

its existence, it

would not have reached its present magnitude,

nor could it occupy a substantial and permanent
place in the world of business.
after every fair

Its survival,

tack upon
If

it

has proved

it,

were not,

it

and unfair

at-

to be a commodity.

it

would have died long ago.

Life insurance, stripped of

its

technicality, is

The insurance com-

a very simple proposition.

pany or corporation, working under State charter

and supposed to be subject to State law, enters into a contract with the insured party,

which

agreement, in consideration of a cash payment

down and a

series

payments extending

of cash

over a period of years or during the

life

of the

insured, guarantees to pay the person or per-

sons designated a stated

sum

of money, either at

the death of the insured or at a specified time

appearing

in the policy.

There are almost innumerable forms of policies, known by various names, such as thfe socalled " straight life insurance," " endowment
insurance," " ten- or twenty-payment life insurance," and insurance written in the form of bonds.

is

The common or usual form of policy is what

known as " straight life insurance," where one

must

die to win; although

[

225

some companies

will

How
pay the insured
policy

he

if

Save Money

to

the face value of his straight

lives to

life

reach an abnormal age.

Another popular form

what

is

is

known

as en-

dowment insurance. This usually costs double

what is paid for a straight life policy. Under
this

agreement, the company obligates

pay

the insured the full value of the policy at the

itself

to

expiration of a specified time, or at his death.

The
policy
life

so-called ten-, fifteen-, or

is

twenty-payment

a sort of compromise between the straight

and endowment

paid-up

policy

payments

called

policies, the insured

having a

after

he makes the number of

for,

but the money not being

paid over until his death.

The insurance bond

ance, the

is

bond having a

another form of insurcertain definite value,

and being negotiable at face value, and at any

time.

All of the States either regulate, or claim to

regulate,

by

law, the forms of policies written

within their jurisdiction, and most of the States

require the

company

to write into every policy

cash-values, which are operative after the

first,

second, or third year, which amounts net are due

the policy holder

if

he discontinues payments upon

the policy, or desires to cash

it in,

I would emphatically advise no one to take out

any policy, of any amount whatever,

[

226

in

any com-

Life Insurance
pany, no matter how strong
there

is

may

be, unless

your insurance agent cannot,

not, place you in one of these companies,

render values.
or will

it

written in the policy definite cash surIf

consult another agent.

Life insurance

If one looks at

it

purely ethical, he

and

commercially legitimate,

is

custom and necessity have made

it

a commodity.

through the narrow lens of the

may

it more or less
company betting on
and agreeing to pay the

consider

of a gamble, the insurance

the

debt

life

of the insured,

if it

but even

loses;

admit that

it

this severe critic

materially from

differs

must

common

gambling, because the insured party continues to

contribute to the insurance pool,
tributions

Nor

in

does the

the form

making

his con-

of periodical payments.

insured need to take lottery or

gambling chances, for the good policy has a cash

and the insured, after a few

years, may at any time, receive a benefit other
than that coming from luck.
surrender value,

I have said that life insurance

is

considered a

commercial commodity, a business necessity, and

Commercially

a family protection.

theoretically, because a
definition of the term,

written

it is,

but not

commodity, under a
is

something which

strict
is

not

upon paper, something neither promised

at, something which is material and

nor guessed

227

How

to

Save Money

weighable, something which we can see and

But
life

to all intents

feel.

and purposes we may consider

insurance a commodity, because

it

gives us

and appears to be necessary under

the present social and economic conditions.
protection,

The expense of insurance cannot be

calculated

with complete accuracy, as can be the cost of an

When you purchase a

you may be able to determine, by examination, what it is worth; and if
you build, you may know what it will cost you.
On the other hand, when you take out a life insurance policy you do not know, and cannot
know, what the expense of it will be to you, nor
does the company know, for neither of you knows
how long you will live.
While I recognize the necessity of life insureatable or of a house.

building, for example,

ance, truth compels

present

life

me

insurance policy costs more than does

any other commodity.

larger

to say that I believe the

Investigations show that

commissions are paid by

insurance

life

companies to their agents for the sale of

surance than are probably given for
business transaction.

Anywhere up

life in-

any other
to half, or

payment
upon a policy goes to the agent and not to the
company, and is not used to increase the comeven a larger proportion, of the

first

pany's assets or to give better protection to the

[ 228 ]


Life Insurance
policy holder.

Instead,

it finds its

way

into the

pocket of the agent, the insured party actually

paying the agent for

that

is

soliciting his insurance,

pay a proportion
company
agent who solicits us,

to say, we, the insured,

of the cost of our insurance, not to the

which insures us, but to the

and

this go-between is without responsibility or

reliability,

and has no part

the transaction

in

save that of soliciting the business.

may

of our subsequent payments

This condition makes

forcing

to

it

cost

life

Even part

be given to him.

insurance expensive,

more than economy would

justify.

The
licitor,

real,

or apparent, necessity for this so-

the high commission paid him,

surance

is

represents

when

in-

admitted to have a tangible value,

one of those peculiar conditions in

business-doing, for the existence of which there

would seem to be no sensible reason.

So long as we need coaxers, instead of waiters,

of trade, commissions or salaries must be paid to
the salesmen; but

derstand
such

it

is

extremely

why companies

large

find

commissions

it

for

difficult to

un-

necessary to give
insurance-getting.

It would seem that, if we need life insurance, we

would have sense enough to walk into the ofiice

of an insurance company and buy a policy over

the counter, the same as we purchase furniture
r

229

Hou:

Save Money

to

or clothing: and yet, a representative of one of

our largest insurance companies informs me that

a

voluntary

practically

application

unknown,

for

insurance

life

substantially

all

is

policies

being written after solicitation, usually with much

and sometimes virtually with coercion.

Unbiassed men and business economists, who
have made a study of the life insurance question,
are of the opinion that this form of insurance can
solicitation,

be sold for
it

much

than the price charged for

less

by the insurance companies.

This suggests

the general establishment of insurance companies

under the direction of the State or National Government.

Already savings banks have added insurance departments, and are offering insurance
rate, but not at as low a rate as

The

savings bank

a fair

supposed to handle

is

cost for the benefit of the insured,

ings

at

was expected.
it

at

and when sav-

bank insurance becomes general, the expense

poHcy will undoubtedly be much less

of carrying a

than the cost now prevailing.

Certainly an ar-

ticle so vital as

good

so largely in the

hands of manipulators and finan-

Life

insurance should not be

who are in business for the revenue only.

Some form of cheap, and yet thoroughly pro-

ciers,

tectire, insurance should

to those of

be given to the poor and

moderate means
L

230

and I

believe

it

is

Life Insurance
the business of the State,

if

not of the National,

Government, to establish and maintain insurance

companies at

cost.

Life insurance has a value, especially, to three

classes of people;

First, the

working man, or business man, or

clerk of small income,

who

one dependent upon him.

makes

has, or

may

have, some

The uncertainty

of life

obligatory that he should provide for

it

emergencies and death.

Even

justified in carrying a

at

an exorbitant

moderate amount

cost he

is

of

insurance, not as an investment, but as a

life

He

protection.

should

purchase the cheapest

form of policy, and should not consider any endowment or other form which the insurance company presents as an investment, unless he be a
spendthrift and not willing to save except under

compulsion.

The second

class that

can use insurance to ad-

vantage includes men of considerable wealth, who

live

extravagantly and luxuriously, and who are

likely, at

any

They can
tection,

time, to meet with financial disaster.

afford

and

life

to

pay high

rates

insurance to them

for

may

pro-

be con-

sidered as a sort of investment, which would be

questionable under ordinary circumstances.

As

their incomes are large, they can afford to carry

policies

representing hundreds

[2311

of thousands of

How

and the endowment form gives them a

dollars,

sort of high-class

circumstances,
carry.

man

of

investment, which, under the

may

it

not be unwise for them to

But I would not advise any conservative

much money to use the endowment or any

other form of

The

Save Money

to

insurance as a pure investment.

life

third class of people,

surance,

is

who should carry

in-

the spendthrift, natural born fool, or

one who has acquired foolishness,

our population which has

little

that

class of

realization of the

value of money, and which cannot, or will not,

save

by any

legitimate or systematic method, ex-

cept where loss

accruing from non-payment

is

great enough to penetrate their understanding.

These men have not brains enough, nor character enough, to save systematically.

If they lived

within a nest of savings banks, they would patronize

none of them.

are

criminally

If they are frugal to-day, they

to-morrow.

extravagant

The

life policy, or even an endowment, may

them to do what they have not sense enough
to do voluntarily.
Of course, they over-pay for
what they get, but they had better over-pay for

straight
force

insurance than for things of less consequence.

There is a large distinction between protection

and investment. Life insurance has a protective
value, and is often a necessity but it offers little
in the way of investment compared with the
;

232

Life Insurance
ordinary forms of investment, I say this notwithstanding

the

made by insurance com-

claims

panies and the bombastic advertising put out by

them.

As

all

commercial

insurance

companies are

purely business propositions and institutions for

money-making, the managers of some of them are

likely to exaggerate the truth, and to attempt to
force upon the public policies which pay the companies

the

rather

best,

than those which

are

They employ highly

best for the policy holders.

paid agents, and use methods of coercion as well

of persuasion.

as

Many

gantly run, pay their

of them are extrava-

officers salaries

which are

out of proportion to the amount of work given,

all

and are dishonestly connected with

stitutions, their

of money, a convenient
the

putting

financial in-

money being a part

through

way
of

of a circle

of getting

large

money

financial

for

deals.

of the companies are con-

Yet, although not

all

ducted along what

may

be considered commercial

lines of straight honesty,

most of them are thor-

oughly reliable so far as making payments are

concerned.

They

give the protection they claim

to give.
So-called industrial insurance at times offers

a needed protection even though

give

it

many

economists

a general condemnation on account of

[233]

its

How
cost,

Save Money

to

which they consider exorbitant.

I would

not advise any one to consider this class of protection until he has consulted
financier,

or business

man

some good banker,

of

standing,

telling

him frankly of conditions and family responsibilities, and at th same time showing him the kind
of policy which he contemplates taking out.
There are many forms of this class of insurance,
and some of them forfeit to the insured all of his
payments

he lapses at any time.

if

phatically against

any form

Philanthropists are
tion,

and

it

am em-

of forfeiture policy.

considering this proposi-

to be hoped that the States will,

is

sooner or later, establish industrial insurance de-

partments, which will give needed protection at a

much lower

cost,

insured to forfeit

and which
all

will

not require the

he has paid

if

he discon-

tinues his payments.

I would advise a

man

of small income to con-

and not to be
by any statement made by the insurance company or the insurance agent. I believe
that a proportion of the printed claims made by
sider insurance only as a protection,

influenced

insurance

and especially those so

by the insurance agent, although

companies,

glibly talked

sometimes technically true, are almost invariably

misleading, and are often intended to deceive.
I think that

many an

insurance agent writes

[234]

Life Insurance
a policy under false pretences

but, notwithstand-

ing this condition, and notwithstanding the unreliability,

and even

men, straight

life

rascality,

of some insurance

insurance, for a

man

of small

and would appear to

be a necessity, if any are dependent upon him.
If the family needs protection, and the head of
it is not well-to-do, with money securely invested,
income,

is

to be encouraged,

he should take out a straight

icy

as

large as he can

life

insurance pol-

conveniently carry, as

pay

large as he can afford to

for at the present

time and during the probable future.

vise

him not

vestment.

But

to consider life insurance as

If he has

money

I ad-

an

in-

to invest, after he

has properly protected his family by insurance,

let

in

him put it in the savings banks, or secure it

some other way. Life insurance is to him a com-

modity, and he should buy

Remember

that

it

is

at the lowest cost.

it

the

company, not the

agent, that gives the protection, that the agent

has no responsibility whatever.

If you do not know about life insurance, ask
some one who does. Obtain the advice of some
good business man, provided hie is not connected
with an insurance company. The officer of your

bank

is

posted, and so are successful

men

in gen-

eral.

Avoid

all

insurance

[235

clubs
]

and

insurance

How

to

Save Money

Refuse to believe any statement made

schemes.

in print, or elsewhere, to the effect that there is

any club or individual working

in

your

interest.

I believe that every one of these clubs, and

all

of

and all so-called insurance experts, are

the employ of some insurance company.

these men,
in

Positively refuse to consider statements made

by insurance companies that a certain form of insurance policy gives you a better investment and
at less cost than you would receive at a savings
bank. Take this statement to a first-class mathematician or accountant, who will undoubtedly
make it plain to you that money deposited in a
savings bank will give you more than will come
from the same amount of money paid to an insurance company.
But this condition does not

operate against the value of an insurance policy,

because

life

insurance gives a protection against

death, and one which should not be ignored

the

man

of family.

But protection

is

by

not neces-

sarily investment.

you
and
that you receive, at its expiration, more money
than you gave the company; but if you had put
these instalments in the savings bank you would
have more money in the bank at the end of ten
or twenty years than the face value of your policy.
[236]
It is true that in

do not pay

some forms of

policies

in the face value of the policy,

Life Insurance
Bear

in

mind that

policies

in

good comis more

all

panies are substantially alike, that there

apparent than real difference

is

forms pre-

company may use

sented, although each

No

kinds to catch the unwary.

different

one good policy

worth more than another good pol-

likely to be

icy,

in the

notwithstanding what the agent says.

The

special inducements offered

insurance companies, are, in

my

by some

life

opinion, purely

imaginary, and are used to fool the people.

Select

some

first-class life

insurance company,

through the advice of your bank, or some competent friend

as

much

who

is

fair

and unbiassed, and have

insurance as you can afford to carry and

need for protection.

Read your policy

understand
business

it,

man

you what

it

have

carefully,
it

or lawyer.
does not.

and

if

you do not

read by some
It

first-class

may appear

Insist

to give

upon having

in-

serted the nonforfeiture clause, which prevents the

company from taking advantage of any technimade by you after a year or

cality or statement

so has elapsed.

Then, with your policy

will

filed

safely away,

you

have the comfort of feeling that you have a

post-mortem asset whether or not you

benefit

from

it.

237

live

to

How

to

Save Money

CHAPTER XXV
FIRE INSURANCE

A
it

DISCUSSION

of fire insurance

is

not out of

place in a book like this, because, although

may not

ment,

it is

be considered a form of regular investnot removed from the investment class,

and, certainly, no sharp line should be drawn

between pure investment and necessary protection.

The

cost of carrying fire insurance

is

not ex-

cessive.

fire

insurance policy should be placed upon

every piece of propert}^, which

risk

is

subject to any

and can be covered by insurance, including

buildings, horses, carriages, automobiles, boats,

furniture, works of art, jewelry,

So much do I

and

clothing.

believe in the necessity of fire

insurance that I consider an unwillingness on the

part of any one properly to protect

as

close to

his

property

Even

an inexcusable crime.

if

one

has only a few dollars' worth of property, he

should insure

it

against loss

by

fire.

The

cost

is

very small in proportion to the value of the protection given.

There are a number of large

[238]

fire

insurance

Fire Insurance
companies, and most of them are progressive,
sound, and reliable.

No

agency

first-class

weak company, but

it

is

tain the standing of the

a policy in

will write

a policy in a

well for you to ascercompany before taking

most

It is a deplorable fact that

it.

any company presented to

them, and that comparatively few of them discriminate for or against a company.
business

Many

men

insure in

insurance agents carry their business in

and do not have even a local standing.

They may represent weak and almost worthless
their hats,

companies.

If the agent

is

not a

man

of stand-

ing, refuse to insure in his companies, unless

you

are assured of their reliability by some first-class

business
values.

man who is
The character

able

to

weigh insurance

of the agent, however, does

not affect the value of the policy.

no

The agent has

responsibility.

Never allow an insurance policy to lapse.

Every one should carry a diary, or dated memorandum book, and mention of the expiration of
the policy should be placed therein on the date of
the expiration, and also on a date a week or
in

advance of
If

you have good

and employ a
he
at your request, give you
which he agrees to renew your policy
[239 ]

reliable agent,

a letter in

more

it.

local standing

will,

How

Save Money

to

without notice.

This fully protects you.

agent does not

officially

If the

renew the policy, his

agreement to do so amounts to the same thing

in

law.
It

is

well to read

There are many

your policy over

senting different conditions.

damage

cover

occurs.

Other

carefully.

different forms, each one pre-

Some

policies

do not

resulting from lightning unless

policies

the premises.

Some

do not allow

you

fire

to vacate

policies are invalid if

you

carry more than a gallon of gasoline in your

Full protection costs very little if any
more than partial protection. Make a truthful
statement to your agent, and tell him that you
want full protection. There is only one price,
which is made by the board of underwriters.
house.

Consequently, insurance in the strongest

costs

you no more than the same policy

company
in a weak

one.

There

may

is

a form of baggage insurance, which

be taken by any one who travels.

inexpensive,

and

It is very

gives absolute protection, cover-

ing your baggage and personal effects in any part

of the United States

road, train,

baggage

and Canada, on any

rail-

car, freight car, steamer or

other vessel, coach, carriage, and in any storehouse, house, hotel, and club, or in
likely place.

[240]

any other

Fire Insurance

Do

not over-insure or under-insure, but always

insure for full value.

If

you over-insure you can-

not get more than the value of the property

burned, and you pay the extra cost for nothing.

Always carry a schedule of your property, even

number of books insured, and place this
paper in your safe, or, better, in a safe deposit
box, or in some secure place away from the property insured.
Do not leave your policies in a
to the

bureau drawer.

An insurance policy is supposed to cover the

market value of the property at the time of its
destruction, not necessarily

but what

it

what

can be replaced for

it will

sell for,

for example,

you

have a sideboard which cost you one hundred dol-

As a second-hand

lars.

would not
can insure
that

sum.

sell
it

piece

of

furniture

for more than fifty dollars, but

it

you

for one hundred dollars or close to

Articles

which have a problematic

and rare books, should be

insured as works of art, and so specified in the
value, like paintings

policy.

241

How

Save Money

to

CHAPTER XXVI
ACCIDENT INSURANCE

DURING

the last quarter of a century, ac-

cident insurance has become

somewhat uni-

In some places this

versal and often epidemic.

due, not only to the fact that

it

is

has intrinsic

value, but to the enterprise of the insurance com-

panies.

Many

people thoroughly believe in the necessity

of carrying accident insurance, while others are

opposed to

The
tive

it.

fact that

it

is

very inexpensive

that accidents are rare.

If they

is

indica-

were

quent, the cost of the insurance would be

fre-

much

larger.
If

you

travel, or

your work

is

hazardous, you

should, most emphatically, take out an accident

policy; but

if

ordinary risk

you are not subject to more than

may not be worth while, although

it

no objection whatever to carrying it,

is small, and I think
that I would favor it upon general principles.
If you are a working man or clerk dependent
I can see

particular^ as the expense

wholly upon your wages or salary, with no money,

or

little

money, saved up, an accident policy may

[

242

Accident Insurance
be considered a necessity.

Many

a poor

man has

been able to take care of his family, while sick

from accident, because of his insurance.

It is well to read your policy over carefully.

You may
the

find that it

company

does not give

it

does.

Show
ness

it

far
all

is

written in the interest of

more than

and that it
the protection that you think

Understand your policy before taking it.

to your lawyer or to some good busi-

Understand what you are getting

you go to the expense of getting it.

man.

before

in yours,

243

How

Save Money

to

CHAPTER XXVII
THE ANNUITY

THE
common form
annuity

a presumably safe but not

is

of investment.

It

is

similar

to life insurance in general principles, but differs

from

it

in that the holder of a straight life policy

must usually

die to win, while the

annuity must

live to win.

An

annuity

is

man

with an

an agreement, made by an

in-

surance or other guaranteeing company, to pay

the annuity-holder a specified
the
of

month or by the year,

it

may

of money,

by

live.

Practically
tainable

sum

so long as the holder

all

insurance policies are ob-

life

by the making of a

payment and

first

continuous, periodical payments, but the annuity

must be paid for wholly

The expense
age,
cost.
ties.

of

the younger

life

the

in advance.
is

based upon

the

smaller the

insurance
insured,

These conditions are reversed with annuiolder the person, the less he pays for

The

an annuity.

No

physical examination

is

necessary, for, as

a matter of fact, the older and weaker the person

r

24-i

The Annuity
insured, the better

for the insuring com-

is

it

pany.

Comparatively few annuities are taken out by

who are too old, as

active business, and who
a stated sum for the bal-

other than aged people, those

a rule, to continue in
prefer the guarantee of

ance of their

any other form of

lives to

invest-

ment.

Then, to many of these people, the annuity

offers

sible to

income

larger

than

may

it

for the annuity; for example,

it

is

possible to

purchase an annuity large enough to

for,

five

per cent,

upon
Twenty

live

perhaps, twenty thousand dollars.

thousand dollars, at

pos-

be

sum paid

obtain from the interest on the

will yield

an

annual income of only one thousand dollars, which

may

not be

sufficient for the

man who

of the

By

is

comfortable support

considering an annuity.

taking out an annuity in a

pany, a comfortable income

is

first-class

com-

assured for

life,

and the holder of

it

financial future.

But before buying an annuity

it

need give no thought to his

would be well for him to consider what

twenty thousand dollars

tains

it.

Perhaps

is

worth to him

if

his

he re-

would be wiser for him to

it

use the interest, and a part of the principal, than

to take out an annuity, particularly

if his

days

are numbered, and, provided, of course, that his

money

is

well invested.
[

The chances
245]

are that he

How
will

to

Save Money

not outlive his money, and would, then, be

able to leave something to relatives, friends, or

charity, instead of paying

it

to the annuity

com-

pany.

Each

case must be considered by

itself.

must be weighed for both advantages and

Each
dis-

advantages.
I would suggest that

if

you are considering an

annuity, you discuss the matter with your doctor

and some good business friend, who are familiar

with your circumstances.

Together, you would

probably arrive at a profitable conclusion.

246


Backing Business

CHAPTER XXVIII
BACKING BUSINESS

ACCURATE
portion

of

are impossible, but

statistics

would appear

it

to be self-evident that a pro-

those

who

start

in

business

for

themselves borrow a part of their working capital,

obtaining

it

from banks, trust companies,

friends,

or from others.
It

is

of this " others " that I

am

writing,

who would loan their money to men starting in business or who would enlarge their busithose

nesses.

This book

is

devoted to men of limited means,

who are unable

to

save more than small sums.

I do not propose to offer

large investor,
to those

who

any suggestion to the

to the captain of industry, or

deal in money-lending.

The pro-

makes a business of loanMoney to him is a commodity. He

fessional money-lender

ing money.
has

it

for sale.

He

is

prepared to meet large or

small losses, his profit depending upon the aver-

age

safety

success of

of

his

investments,

He

any one of them.

is

not

upon the

under the pro-

tection of the law of averages.

Loss and risk are parts of the scheme of busi[

247

How

Save Money

to

ness-dbing; but only the

minimum

taken by one of small income.

risk should be

If large risks are

they should be confined to those who

justifiable,

can afford to lose, who know how to play the

game of speculation, and who will not touch bottom if they meet with ordinary or occasional
losses.

Altogether too often men of considerable means,

and small

money to friends and

who are about to start in business,

investors, loan

acquaintances,

or who desire to extend their business and have

not the necessary capital for doing

times this

so.

Some-

done for friendship's sake, but more

is

often on account of the high rate of interest paid,

or the promise of large returns.

I consider this form of money-lending removed
from investment, so far as the man of little money
is

concerned.

At

best,

hazardous

it is

First, because the loaner

is

not likely to be

capable of accurately diagnosing business conditions

he

is

not in a position to know the ins

and outs of the business for which the money

is

to be loaned.

Secondly,
friendship

he

may

be

influenced

either

by

or by visionary expectation, and be

led to believe that he will receive

an exorbitant

return for his loan.

Thirdly,

it is

unusually

difficult to

[248]

obtain good

Backing Business
much

security, or

any except unreliable pro-

of

spective.

Fourthly, the lack of judgment on the part of

the borrower, or

many

other causes,

may

operate

for loss.
Fifthly, his money is at arm's length; yes,
more so; for it is altogether out of his reach. It
is not like money in the bank, subject to draft;
it is money where it cannot be called in when

wanted.

Let me again impress upon the salary-receiver,

wage-earner, and the

man

of low income, that

they have no business or moral right to consider

any form of investment which does not present

maximum, or close to the maximum, of se-

the

curity.

Unless one

is

financially able to take speculative

chances, he should not place his

money out

of

his control, except in the best of investment securities,

or in making deposits where there

actual safety, or what

so considered

is

by

is

the

best judges of investments.

True, when one deposits

in the savings

bank,

or buys a government bond, his

money passes

the control of others, and he

is

to dictate the action of those

ings.

But

would be

if

into

given no right

who handle

his sav-

money is better protected than it

he had it, because it is in the hands

his

249

How
of conservative

one man,

and

Save Money

to

and experienced men,

not

any

subject to the care of a com-

posite organization.
It should be borne in

per cent of the men

in

mind that about ninety

business for themselves

either have failed or will fail during their career.

many

them recover from disaster and

become successful ultimately.
But when accurate statistics show conclusively that bankruptcy,
True,

of

or some other form of failure,

is

experience of nine-tenths of the

sure to be the

men

in business,

would appear obvious that the small money-

it

saver had better not take so great a chance with

his

hard-earned accumulation.

man may

be justified in taking a

little

than reasonable risk with his active money,

money which
certainly

he,

himself,

bad judgment

to

controls,

but

invest one's

more

that

it

is

savings

where they are unprotected, either by personal

or composite security.

The man

of small income should never back

anybody's business, save his own, or loan money

to

anybody without ample

security,

unless

the

loan be out of friendship, and then only when the

pressure of friendship, or the friend's necessities,

are great enough to warrant the risk which sometimes friendship rightly requires.

[250]

Backing Business
Never loan money to anybody, under any circumstances, without security, unless you do it for
love,

and do not do

it

for love without taking

yourself into consideration.

[251]

How

Save Money

to

CHAPTER XXIX
KEEPING A BANK ACCOUNT

THERE

are three kinds of banks of deposit:

national bank which cannot be

First, the

capitalized

for

dollars,

and

United

States

is

however rigid
guarantee
cure

the

best,

but

than twenty-five

less

Government.
it

the

may

This

supervision,

be, does not,

and cannot,

of

reliability

against

depositor

safeguard

protection.

thousand

under the direct supervision of the

him,

National banks

the

bank,

loss.

It

or

se-

can,

at

and

operate

fail,

but, as a rule,

as

fewer of them collapse than any other class of

financial

The depositor

institutions.

is

a pre-

ferred creditor, and he must be paid first; therefore,

when the bank

receive

all,

deposit, although he

time for

all

of

it.

he

is

quite likely to

of the

money held on

fails,

or nearly

all,

may

be obliged to wait some

Unless the collapse

is

almost

complete, the other banks are likely to stand

by

the one in trouble, and to advance a large part of

the deposited money, in which case the depositor

would not have to wait more than a few days or

weeks, except for a small percentage of what he

had on

deposit.
[

252

Keeping a Bank Account

Secondly, trust companies, or loan and trust

companies,

which are institutions

incorporated

under State law, and subject only to State

spection.

The

in-

larger and better trust companies

are usually co-members with national banks of

the local clearing houses, and are then subject to
some supervision by the clearing-house officials.
This supervision is quite likely to be very rigid,

partly because the failure of a loan or trust com-

pany

affiliated

with the national banks

is

a direct

members of the clearing house. As

the laws in some States are not as strenuous as is
the national bank law, it is quite probable that
many loan and trust companies do not receive
injury to

all

as thorough a supervision as

is

given to the na-

But many large trust companies

by men of ability, integrity, and
responsibility, and are as financially sound and
tional banks.

are

officered

as safe as are the majority of national banks.

This

Thirdly, the so-called State bank.

tution

is

practically the same as

bank, except that

it is

is

insti-

the national

not under the supervision

and inspection of the United States Government.

As a matter
between

it

of fact, there

is

very

little

difference

and the loan and trust company.

National and State banks, and loan and trust

companies, differ from savings banks in that they

do a purely commercial business, the depositor

[

253

How

Save Money

to

or customer placing his

may draw

he

money

bank that

in the

out by check at any time.

it

The

depositor is, besides, entitled to what is knows

as " accommodation," the bank agreeing to dis-

count his paper and to loan him money from time

time, provided, of course, that the security

to

offered

The

by him, or

his credit, justifies the loan.

national bank issues bank

money.

No

bills

other institution does

the State bank can legally do so, but

by a prohibitory

or paper

it,

although

is

prevented

tax.

National banks do not, as a rule, pay interest

on deposits subject to check, unless the account

somewhat

is

An

inactive, or

inactive account

is

is

very large.

one where the depositor

make more than an occasional deposit,

and draws comparatively few checks, and does
not often borrow money from the bank. Because
does not

his

account requires very

national banks

average

pay

little clerical

interest

thousand

work, some

on deposits

dollars.

if

Practically,

they
all

State banks, trust companies, and loan and trust

companies, pay their depositors two per cent on

daily balances of not less than five hundred dollars,

a few companies allowing interest on three

hundred

dollars,

and some do not pay more than

one and a half per cent.

Occasionally, a trust

company or State bank pays

r

254

tyvo

and a half to

Keeping a Bank Account

three per cent on daily balances subject to cheeky

but I do not believe that any well-managed

insti-

tution can afford to give so high an interest rate.

am

paid, I

If

it is

is

doing

it

unless the

inclined to think that the

bank

and any voluntary

loss,

at a loss,

money involved

is

used for legitimate

advertising or development purposes, does not

speak well for the bank's standing and

reliability.

Some State banks and loan and trust companies

maintain a savings bank department, which is
separate and distinct from the regular banking

department.

The depositor

places his

money

in a

bank for

two reasons
First, that it

may

Secondly, that he

drawing

it

venience, as

it

may

use

out by check.
it

large sums of

ing

be secure.
it

This

as he wants
is

a great con-

obviates the necessity of carrying

money on

in the office or

one's person, or of keep-

home, and

is

the best protec-

tion against robbery or other loss.

convenience of paying

the

it,

bills

It offers also

by check, and

sending remittances by mail with the liability of

loss

reduced to a minimum.

vantage,

which

for the depositor,

size, will

he

is

of

is

if

It

has another ad-

considerable

consequence,

he carries a deposit of fair

be accommodated by the bank whenever

short of money, provided, of course, that he

[

255

How

Save Money

to

No

can give security.

reputable bank ever takes

more than the current rate of

is

and that

interest,

always far below that asked by loan agencies.

The borrower
amount
officers

and the

to the bank,

it

or directors pass upon

either be
else

usually makes out a note for the

desired, carries

The note must

it.

endorsed by some reliable person, or

by

accompanied

bonds, or the
face value of

it is

some

security,

If the note

like.

paid to the depositor,

discount or interest.

For example,

stock,

accepted, the

is

let

less the

us suppose

that you borrow a thousand dollars from your

bank for four months at

discount.

six

per cent interest or

Six per cent interest per

annum

is

two

The bank, therefore,

per cent for four months.

instead of giving you one thousand dollars, gives

you but nine hundred and eighty dollars, taking

out of the thousand dollars in advance the inter-

The note must be paid

est or so-called discount.

at maturity or renewed.

I would advise
less

in

any

one, if he has a

some good bank, and to pay

cepting small ones, by check.

a great convenience, but
it is

sum

of not

than two hundred dollars, to open an account

it is

a protection against

receipt for

money paid

made payable

all

of his

bills,

Not only
more

is

exthis

businesslike;

loss; it offers a legal

out, provided the check

is

to order and not to bearer, for the

[

256]

Keeping a Bank Account

money

receiver cannot obtain his

unless he en-

dorses the check, and this endorsement

good banking connection

is

is

a receipt.

of great value to

any

one, whether he does business or not, whether

he

a clerk or

is

is

in business for himself, or

whether

or not he needs a bank for borrowing purposes.

man

with a bank account stands better in the

and out of it. The mere

bank money is prima
facie evidence that he has some local standing.
Even men with small incomes can save enough
money, if they will, to start a checking account.
community,

in business

fact that he has available

It

is

quite easy to ascertain the weakness or

The character
command counts for much. They

men

soundness of a bank.

of the

in

are usually

of high standing, rigid integrity, and progressive

Their position

conservatism.

bankers, and bank

known

is

to other

are usually willing to

officials

give expert opinion of the standing of other insti-

The bank

tutions.

and

its officers

that

unknown

is

of no standing at

all

or of

little

Never deposit any money

small, until
all right,

bank, large or

the majority of the business

it.

parties will refuse to

rule,

unsound,

reputation.

in the

you have inquired about

town know about

As a

is

are ordinary business men, either

If

it

is

it.

it is

in the

shaky, responsible

recommend

it.

do not ask a professional

[257]

If

men

man

to

How

Save Money

to

give his opinion of the character of a

Go

other institution.

bank or

to some well-known busi-

man of character and standing. Better see

two or more of these men. Naturally they know

ness

much about

bank in town, or
they are acquainted with men who do know.
If there is no bank in your place of residence,
and the nearest one is some miles away, you can
the inside of every

easily obtain the rock-bottom facts.

letter ad-

dressed to any large national bank in a city will

bring a courteous reply.

Responsible bankers

never speak well of weak institutions; they can-

not afford to do
city banks.

so.

Better write to two or three

The names

of the officers and direc-

tors of all reliable banking institutions are public

property, and their reliability

is

known

to every

near-by banker and large business man.

There are scattered throughout the country,

usually in small towns, banks of deposit owned

and controlled by unreliable men with questionable reputations. Many of these banks are links
Frequently they are con-

of a chain of banks.

by one man, who is able, at any time, to

Unless you are a financial expert,
your own opinion is worth very little. If a retrolled

wreck them.

man or banker recommends

your money may be placed there at

sponsible business

the

bank,

the

minimum

of risk.
[

258

The Cooperative Bank

CHAPTER XXX
THE COOPERATIVE BANK

THE

cooperative bank

is,

as

its

name

implies,

a combination of men banded together for

mutual

loans,

its

Its

and protection. It deals excluand real estate mortgages,

as a rule, being confined to its members.

interests

sively in

real estate

capital

is

obtained by selling shares, each

share-holder having full voting rights, and some-

thing to do with the management of the business

and the investments.

The

share-holders elect the proper officers and

committees, whose province

is

to invest or loan

the money, presumably at the very

They

safety.

There

is

is

or no opportunity for em-

little

little

ready

on hand at any time, the money being

out immediately with

money

of

are not supposed to take any risk.

usually

bezzlement or irregularity, because

cash

maximum

its

coming

let

in.

by vote of the
share-holders in meeting assembled, or by a large
committee chosen by the share-holders.
All

is

loaned,

either

Checks are not valid unless they bear several

signatures.

The utmost

caution
[

is

259

encouraged, and every

]

How
action

is

Save Money

to

passed upon, leaving

little

opportunity

for carelessness.

share in a well-organized cooperative bank

offers

very good security, whether or not the

owner intends

borrow money of the bank

to

for building purposes.

The

principal danger,

and perhaps the only danger, lies in the possible lack of judgment on the part of the
officers and committees who invest the money.
Should loans be made above the value of the
property, a loss

is

likely to

tinuous lack of judgment

is

occur, and a con-

pretty sure to wreck

the bank.

Then, carelessness on the part of the local ad-

may

viser or title-searcher
is

sometimes

title

is

difficult

good.

pass a weak
as

its

large,

title

result in disaster.

It

to ascertain whether or not

An

incompetent attorney

and pronounce

it

sound.

may
But

investigating and investing committees are

and as

all

of the

members

are, or should

be, familiar with the territory in which they live,

and, further, as the bank

outside of

its

is

not likely to loan

town or suburbs, there

is

ample

opportunity for properly weighing values, and,

consequently, less

chance for the exercising of

bad judgment.

The

strength of the bank

260

is

dependent upon

The Cooperative Bank

the character of

its

members and the conserva-

tism and judgment of

its

committees.

I would not advise any one to have anything

to do with a cooperative

bank which

or managed by speculators and

ulators, or with

any bank which

under the control of one

man

is

financial
is

officered

manip-

apparently

or of any one set

of men.
If the

bank is solid and well managed, its sound

is known to the regular bankers and

condition

leading business

men

of the town.

Unless these

recommend the bank, keep away from it.

obvious,
It is
of course, that no well-managed
cooperative bank can pay more than current
rates of interest. The bank making, apparently,
more than a fair rate of interest is probably unsound.
The borrower, with good security, is
never obliged to pay exceeding six per cent interIf he pays more than that, he does it because
est.
the security he offers is not up to normal.
The cooperative bank is especially recommended to those about to build, who would then
have an opportunity of borrowing from a com-

men

will

bination of which they are a part.

you are a member of a cooperative bank,

all of its meetings, that you may keep
track of what is being done.
If

attend

[261]

How

to jSave

Money

CHAPTER XXXI
THE HOME BANK

THE
and

custom of keeping,

old-time children's
of sometimes

filling,

or iron

little tin

bank, with pennies or other coins, has, during the

last

few years, broadened

out to include the

itself

older people.

Hundreds

and

thousands

of

fathers

and

mothers, and young men and women, married and

make it a point to deposit in one of these

home savings banks from a cent a day to a
larger sum a week. Many make it their duty to
drop into the bank all of the pennies they receive,
single,

little

or

all

of the five-cent pieces, or all of the ten-cent

pieces.

This custom

is

among

to be encouraged, even

the well-to-do, for

allows one, almost uncon-

it

sums of

sciously, to accumulate small or greater

money, which may be used for a

specific

purpose,

or placed in the savings bank, or otherwise put

away, whenever the amount

is

large enough for

deposit or investment.
I would most emphatically advise the

family, the wage-earner,

man

of

and salary-receiver, to

place on the dining-room shelf a tin or iron bank,

[

262

The

Home Bank

and to make systematic

visits to it;

and, further,

to have one for each of the children,

each of the grown-ups as

tributes

more

well.

to the principle of systematic sav-

Its whole influence

ing.

and one for

Nothing con-

is

good.

It

one of

is

the foundation stones of success.

But be systematic about

it.

Better deposit one cent a day every day, than

five

cents occasionally.

Better put
it

away every

five-cent piece,

religiously, than to save only

and do

when the

spirit

moves.
Establish a basis, whether

or a dollar a day,
it,

stick to

it,

it

be one cent a day

and when you have established

unless the unforeseen occurs.

263

How

Save Money

to

CHAPTER XXXII
KEEPING ACCOUNTS

EVERYBODY,
farm or

the

business or out of

in

it,

on

in the store or office, in school

as teacher or pupil, married or single, old or

know

the difference

between subtraction and addition,

should keep

young,

if

old

enough

to

some sort of a record of the money coming

where

it

in and
came from, and of the money going out

and where it goes.

There is every reason for this, and absolutely
not even the slightest shadow of an excuse for
not doing
It

is

it.

very necessary

comes from and where

it

to

know where money

goes, whether one handles

a few dollars a week, or a few million dollars a

year.
in

am not

bookkeeping,

double-entry.

try "

is

asking the reader to take a course

or

even

But what

consider

is

known

the

art

of

as "single en-

as simple as the multiplication table, for

all one has to do is to enter what he receives, and

what he pays out, and strike a balance, which
cannot help showing him whether he is running
ahead or running behind, and enables him to lo[

264

Keeping Accounts
and unnec-

cate with exactness necessary expense

essary extravagance.

In no other

own

way can he

be familiar with his

financial condition, or ascertain whether or

not he

is

spending too much or too

any

little in

direction.

The mere keeping

of accounts will not prevent

extravagances, or careless expenditure, but

and

locate the leaks,

this,

by

it will

works for

itself,

economy.

No
will

One book

elaborate books are necessary.

In the

do.

money you

first

part of

enter

it,

all

the

Simply write

receive.

1912
Jan.

Salary

1,

Feb. 2, Interest

$22.00

from

Savings

Blankville

Bank
Beginning

19.40

in the

middle of the book enter each

item of expense, as
1912
Jan.

1,

Rent

$26.00

Jan. 15, Groceries (Cobb

& Cobb)

Jan. 31, Lunches for the month

It

iture

is

3.68

6.25

not necessary to enter every small expend-

by

itself.

For

instance, if

[265

it

costs

you ten

How

Save Money

to

day for carfare, make one entry for the

And little things, like postage stamps
and spent nickels, can be lumped together under
" incidentals." But do not take too many libercents a

month.

with incidentals.

ties

make blank

to

It is better to specify

than

they are of very

entries, unless

little significance.

At

month strike a balance, and

at the end of each year make up a little table of
averages, of loss or gain. In this table you will
include what you have saved.
If you are not a professional bookkeeper, and
the end of each

have never studied bookkeeping, I suggest that

you ask some bookkeeper

sistance, to

map

and

follow, so easy
fill

Do

out.

it

to give

you a

little as-

out a sort of form for you to

so simple that

not

this

let

you can readily

bookkeeping friend

work out for you any complicated scheme

keeping accounts.
you, provided

Accurate
that I

may

it

The

simpler

of

the better for

it is

covers the ground.

statistics are impossible,

but I think

claim that one half of the men, and

ninety per cent of the women, either keep no

record of expenses, or keep one which

worse than none at

will,

if

little

questioned, present one or more of the

convenient,
excuses.

is

These foolish people

all.

standard,

Most

kiln-dried,

and mildewed

of them will say that they have

r

266

Keeping Accounts
Ninety-nine per cent of those who

not the time.

use this excuse refuse to keep proper accounts

from pure, unadulterated laziness, unwillingness

to handle time as a commodity, and a lack of appreciation of established principles of economy.

The only

who have plenty of

class of people

time for everything are those who are extremely

busy.

man

If

to do

you want anything done, ask a busy

for you, not the loafer.

it

Another excuse, which

the foregoing,

is

counting what he has

his

income

is

is

not quite so dry as

that one can

fifty

left

tell

what he has by

over; that

dollars a

is

to say,

if

month and he has

eight dollars left over at the end of the month,

have been forty-two dollars.

his expenses

This

unworthy of any consideration, and

back of it. It is important to know
how much we have left over, but not more so
than it is to know how it happens that we do not
excuse

is

laziness

is

have more or

Another
excuse

is

less left over.

thoroughly

idiotic

used by the careless and lazy, who claim

that knowing where

it

and

prevalent

money comes from and where

goes does no good, either in expenditure or in

saving.

The absurdity

of this claim

is

too great

for even passing comment.

While there are hundreds of thousands of men

and women who do not understand bookkeeping,
[

267

How

Save Money

to

and who do not keep complete or even

counts,

and

it is

a fact that practically

successful

savers,

those

who

all

fair ac-

systematic

respect

and

recognize the responsibilities of the present and

future, those

who

are wise enough and honest

enough to protect themselves for the good of

themselves and the community, keep some sort of
account of income and outgo, and regulate their
financial affairs with some degree of system.
I do not

mean

to say that every spendthrift,

and that all improvident and irresponsible people,

do not keep a record of their financial affairs, but
I never knew a spendthrift, or any other careless
handler of money, who took any account of what

came

in

and what went

The keeping
to

out.

of accounts

is

financial

absolutely necessary

and economical management of

affairs, and to systematic saving and

the proper

accumulation.

268

Treating

CHAPTER XXXIII
TREATING

HAVE
I

not considered treating under the

chapter headed " Petty Extravagances." It

has become so common, and has been responsible

for so great a waste of money, that

discussed

by

itself.

am

it

should be

inclined to feel that

treating has become epidemic, and that

its

prac-

tice is increasing.

There

a difference between the showing of

is

necessary courtesy and the practice of indiscriminate courtesy, which

is

commonly

called treating.

Treating does not create or maintain friendship.

Its

effect,

in

the

is

likely

opposed to friendship.

diametrically

goes beyond the courtesy

foolishness,

end,

is

line, it is clear

without excuse,

extravagance, and

is

is

to

When

be
it

and sheer

saturated with

often criminally wrong.

Hundreds and thousands of men could save

money if they gave up treating, not

considerable

only their friends, but their acquaintances.

In the

first

place, treating

is

an inexcusable

The treater almost invamoney for things he does not

and expensive habit.

riably spends his

need, and he

is

obliged to partake of those things

[269]

Hoiio to Save Moneij

at

own expense every time

his

that

he

treats

another.

Comparatively few men

like to

drink alone, and

very few become intoxicated from the solitary

Xinety per cent of intoxication and liquor

bottle.

drinking

is

table, or

where men congregate

done at the open bar, at the dining;

and the man who

would take but one drink, takes

a dozen, because

It is so with smoking,

of the habit of treating.

and with other

habits, but

it

is

largely confined

to drinking.

propose to deliver a temperance

I do not
ture.

But

It

would be out of place

am

in a

book

lec-

like this.

considering liquor drinking and treat-

ing as prevalent and inexcusable extravagances.

The habitual drinker or

treater does not,

and

cannot, as a rule, provide for his future.

Liquor drinking
tion,

of

and

is

is

the fore-runner of degrada-

an unrelenting enemy of every form

economy, and

most

agent

successful

of

extravagance.

Alcohol has

its

place, but there

is,

from every

standpoint, moral and material, no excuse for the

habitual drinking of liquor as

a beverage, and

the drinker, and especially the treating drinker,

cannot forge ahead, and he

is

not likely to be able

to provide for the future.

It

is

a fact that the higher grade of

[

270

men are

Treating
the least addicted to treating.

They may do

it

and some of them may

be moderate drinkers; but the rank and file of
them pay their bills, earn the money which they
spend, and spend it carefully, always with the
exercise of good judgment.
No one but the habitual treater has any respect
for the habitual treater, and I do not think that
even he has much of any for his kind.
Friendship that comes from promiscuous treatoccasionally as a courtesy,

ing,

ery,

from any kind of mental or physical debauchis the weakest sort of friendship, and is

without staple foundation.

[271]

Horc

Smje Money

to

CHAPTER XXXIT
THE SATE DEPOSIT BOX

WOULD

-:--T

}.i~^^

--:--.

:-e.

I
1

V-

- -

-.4

'^^

U.^i^

I:

v=:!:

: I

- .
.

:-f7

Srmlj.
a."i

::z.-.}-.z.:z^z

c?-:5e

c^7

^:.d

^:i

rh^

to Imrg^aiiae tbe

ssftle

y- htassi

---

^ir

\:i

the

mid

mj

: s

.i

r.

.- i

c-:i:ir

box

7 ^

glar alaims,
:h3 hi^iest

know

get

the con-

lireak into the

aftendsiitsy safety

:-:e::T:ri:r.

::-

:- j:-:oly

likely to

s s

: :

r-:-

Hr nmst

ciz ::i

tbdI: 5

-g:^:

fizst, be-

greatest care.

-su^Ev protected by

T-rLj. b.-_i^

r:::-5i-^:

into tfauB,

i-z

~3.::-:i:ii. t^^:::::

zlz':.'.

c:

tats f

::::p

'-'-'.-

::

:t: v:5t

::gh:5,

gTide

-z

and be
after all,

be

JQst ms fikdty to iorce a Tacaz: bos as ooe con-

[s]

The Safe Deposit Box

It

would seem that there might be some danger,

the attendant, knowing the renters, might

that

get into the box; but, so far as I know, this has

In the

never occurred.

key.

The

caution,
of

first

the attendant's

required,

two keys are

and the renter's

place,

key

attendants are selected with every pre-

and

it

would be very

difficult

for

any one

them to commit burglary without conniving

with his associates.

Boxes large enough to hold any reasonable

amount of property can be rented for from three
to ten dollars a year.

If the wage-earner feels

that he cannot afford the price of a box, and

holds valuable papers, I would suggest that he

wrap them up carefully, with his name and address in his own handwriting on the outside of
the package, and ask a reliable banker to hold

them for him.

Of

course, there

here, but not so great as there

papers were

left

about the house.

273

is

little

would be

if

risk

the

"

How

to

Save Money

CHAPTER XXXV
WHAT SOME TERMS STAND FOR
yiBOVE

^^

Par,

Above

par, or more than par

and bonds
more than their

value, usually applies to stocks

which are quoted,

face value.

sold, or valued at

For example,

if

a stock, with a par

is worth or is
more than a hundred dollars, such stock
is said to be " Above Par."
Assessment, Holders of stock, other than
non-assessable stock, can usually be called upon
to pay an additional sum, after they have purchased the stock, and this is called an assessment.

or face value of a hundred dollars,

sold for

It

is

well to avoid purchasing stock that

is

not

The certificates of non-assessable

stock contain the word " Non-Assessable."

non-assessable.

Bear.
are

Those who operate

called

" Bears."

for declining prices

" Bearing

the

market

means to attempt to force down the prices of

stocks and other securities.
This term is applied to a number of
Block.

shares of stocks or bonds of the same kind and

bought at the same time.

Board.

A short designation

for the stock ex-

change, or stock board, or place where stocks and

[274]

What Some Terms Stand For

bonds are
office.

Bond.

sold, other

than a banker's or broker's

certificate

running for a

definite

and

which acts as a legal receipt for

specified period,

money borrowed by any government or corporation, and upon which interest is payable at a
The bond
specified rate at specified intervals.
may be secured by a mortgage or other lien upon
the property.

Bonds, as they run, offer better

security than do stocks

and usually pay a much

lower rate of interest, which

other

than

specified rate,

dred per cent.

is

fixed

while stocks,

any
and may pay up to several hunBut it should be borne in mind

preferred,

do

guarantee

not

that any guarantee written upon the certificate

is

worthless

if it

represents property of

little

or

no value.

A quick and unexpected

Broker. One who makes
Break.

decline in the

price of stocks or other securities.

his business to

it

or sell any form of securities,

coming from commissions. He
banker, although one

a banker.

may

his
is

buy

remuneration

distinct

from a

be both a broker and

Brokers who deal

in stocks

and bonds

are sometimes called " stock brokers " or " bond

brokers."
Bull.

One

who

operates, or

who attempts

to

operate, the stock market for advancing prices.

[275]

How
To

to

Save Money

" bull the market " means to attempt to force

the prices above normal.

Call-Loans.
that

is

without

Money loaned subject

to say, the lender

advance

giving

demand;
money
although most
to

may demand
notice,

his

call-loans are not considered payable in less than

from one to three days.

Capital,

The

fund which

is

capital of a corporation

used for the practice of

is

its

the

busi-

and includes all of its property, both real

and all other assets. A company incorporated for, say, a hundred thousand dollars, is
supposed to have property or funds to that
amount, occasionally more; but the majority of
corporations, making much effort to sell their

ness,

estate

stocks, have very

the

amount of

much

less in

their capital,

real assets

than

many companies

be-

ing capitalized for a thousand times the value of

what they are supposed to own. Under the loose

laws of some of our States a corporation may be
formed with an " expressed " capital of a hundred millions of dollars, and yet
the actual extent of
to a hole in the

its

its

may

assets

Capital Stock.

and

be limited

ground and a patented but

pick.

useless

The sum

of a corporation as the
stockholders.

propert}^

fixed by the charter

amount paid in by the

In some States
[

276]

it

must be paid

in

What Some Terms Stand For

cash, but in others

it

may

be paid in Avoithless

options or patents.
Certified Check,

A check which has been preSome

sented to the bank, but not cashed.

officer

of the bank, usually the cashier, stamps across

the

word, " Certified," and below

it

his

So far as the receiver of the

concerned, this check is no longer a per-

is

sonal one, but

is

in reality

certificate of deposit,

the failure of the one drawing

is

liable

no way

it in

tiating it; but the depositor, or one

check,

writes

signature.

official

check

it

should the bank

vi-

drawing the

fail,

if

he per-

sonally presents the certified check in payment,

while he
of

it

exempt from

is

liability if the receiver

has asked the bank to certify

Mortgage. ^A

Chattel

such as

property,

it.

mortgage on personal

furniture,

horses,

carriages,

stock in trade, and almost everything else except

real estate.

Commercial Paper,

term applied to notes

given in business which are negotiable, that

be sold.

Common

Stock,

Stock

which

equal dividends of the profits,

after the

payment of dividends

if

entitles

is,

can

one to

there be any,

to the preferred

stockholders.

The expression " cornering the marCorner.

"
applies to the condition of the stock market,
ket
[

277

How
when

stocks

certain

Save Money

to

are purchased in sufficient

quantities to allow the buyers of them to control

the price.

Coupons.

Detachable

which are a part

slips,

of some bonds, on which one receives the interest

They

due at specified times.

are to be cut

off,

and presented for payment on the dates printed

upon them.

Curb Market,
A place of trading in stocks
and bonds, usually located upon the street (hence
its name), in which are bought and sold stocks
or other securities which are not recognized by
the regular stock exchange or stock board.

So"
"
called
curb stocks
are likely to be of ques-

tionable value,

and

The

speculative.

away from

all

are, at best, considered highly

small investor had better keep

stocks or other securities sold on

the " curb."

Debenture Bonds,
rial

Bonds that have no mate-

or tangible security back of them save that

of good- will, good intentions, and reputation.

Dividend,
divided

That

among
in

is

the stockholders.

Fully-paid Stock.

paid for

part of the profits which

The

stock which has been

cash or in property, or in some rec-

ognized or legal equivalent, and

is

not, therefore,

assessable.

Future,

The

buyer's
[

278

right to
]

demand

deli-

What Some Terms Stand For

very, and the seller's right to deliver, within a
certain specified time.

Lamb,

A term applied

to inexperienced stock

The word "

buyers and speculators.

be more appropriate.

Listed Stocks and Bonds.

fool "

would

Securities that are

recommended and sold by the regular stock exchanges and stock boards, and are not subject to
the

usual

of

fluctuations

purely

speculative

must not be understood that the

Thouis guaranteed.
sands of men have been ruined by buying only
what were supposed to be reliable stocks and
stocks

but

it

value of " listed stocks "

bonds.

Long,

One

called " long on

is

"
the market

when he has bought stock with the expectation

of an advance in price.

Margin.

Stock

said to be purchased " on

is

margin " when the customer pays down only a

part of the price, the usual payment being ten
per cent, which

is

supposed to cover any probable

decline within the next few days.

Ninety out of

every hundred failures are due to buying stock

" on margin."

of-sale,

mortgage is practically a
but the mortgagee cannot obtain

Mortgage.

bill-

the

property until the expiration of the mortgage,

provided the interest

is
[

paid regularly, nor can

279

How
he obtain

it

Save Money

to

without a foreclosure, and the mort-

gagor has a right to redeem his property at the

expiration, if he pays the principal and interest.

One who
money on a mortpropMortgagor, One who mortgages
Par, The
or written value of anything,
Mortgagee,

lends

gage, who takes a mortgage as security.

his

erty.

face

but Tisually applied to stocks and bonds.

stocks generally have a

class

hundred
Point.

dollars.

Applies

to one dollar a share.

stock advances ten points, for example,

to be worth ten
price.

Pool,

First-

par value of one

Large

dollars

more than

quantities of

When

it is

its

said

former

any stock bought

together for putting through some deal.

Stock,

Preferred

Stock

which

owner to dividends out of the net

anything

paid

entitles

the

profits before

is,

regular stockholders,
the holders of what is known as " common

stock."

Preferred stockholders have also the ad-

that

is

the

to

vantage over the others should the company be

dissolved.

Preferred stock can never pay a

di-

vidend above that specified upon the face of the

certificate,

the

no matter how large the

company may

be.

Private Corporations.
[

Business

280]

profits

of

concerns do-

What Some Terms Stand For

ing business with private capital and under private management, and not amenable to legislative
control beyond the laws covering general corpo-

These companies include practically all

business houses or combinations other than partrations.

nerships.

Municipal or State
Corporations, Those which op-

Public Corporations,
ganizations.

Quasi-Public

or-

erate under franchise, such as telephone, telegraph,

railroad, gas,

Although

and water companies.

they are private corporations they are somewhat

under government control.

Selling Short,

the

When one

price and

sells

at a price with

of buying a stock at a lower

expectation

making

delivery, he

is

said to be " sell-

ing short."

A stock
or any other
part
Sinking Fund. A
money
sum
purpose.
a
Syndicate, A combination of men formed
Share.

of the capital stock.

definite

aside for

certif-

certificate,

icate, representing a

of

set

specific

for

the purpose of putting through ^ome business

deal.

Underwriting,

A banker, or group

and manipulators, who purchase an

of bankers

entire

bond

issue at a specific price, with the expectation of

retailing the bonds at a higher price.

[281]

How

to

Watered Stock,

Save Money

When

stock

is

issued in ex-

cess of the tangible property, the security

to be " watered."

Working

Capital,

That portion

is

said

of the capital

of the corporation, or other concern, used directly

for the doing of

its business.

Treasury Stock.

That

part of the capital

stock which has not been sold, but has been held
in the treasury of the

company

from time to time as the

to be disposed of

necessities of the busi-

ness warrant, the proceeds of the sale to go into

the business.

THE END

[282]

INDEX
Above par, ^74
Accident insurance,

Accounts, keeping, 264

Advice, taking, 83

Annuity, the, 244

Assessment, 274

Banks of deposit, 252

Bear, 274
Block, 274
Board, 274
Bond, 275
Bonds, debenture, 278
Bonds, listed, 279
Bonds, State, municipal,

Backing business, 247

Bad investments, 185

Bank account, keeping
a,

252

Bank

stock,

127

States,

safe

deposit,

272

259

Break, 275
Broker, 275

Bank, the home, 262

trust,

United

113
Boxes,

Bank, the cooperative,

Bank,

and town, 118

Bonds,

the

loan

Bucket-shops, 137

and

252

Bull,

275

Business, backing, 247

Bank, the National, 252

Business banks, 252

Bank, the savings, 99

Bank, the State, 252

Buying a home, 210

Buying stocks on margin, 146

Banks, business, 252

283]

Index
Caxl-loaxs, 276
Candy, 68
Capital,

Debt, 146

Deposit banks, 252

276

Deposit boxes, 272

Capital stock, 276

Dining out, QS

Car-riding, 68

Dividend, 278

277

Certified check,

Dress, 68, 79

Chances, taking speculative,

96

Chattel mortgages, 183,

277
Clothes, 68, 79
Commercial paper, 277
stock,

Fake

investments,

185

Comer, 277

Fire insurance, 238

Fixed expenses, 37
private,

280

Friends, loaning to, 90

FuUy paid

Corporations,

petty,

68

277

Cooperative banks, 259

Corporations,

Expenses, fixed, 37
Extravagance, 53
Extravagances,

City bonds, 118

Common

Drinking, 269

public,

stock,

278

Future, 278

281
Corporations,
public,

quasi-

281

INVEST-

MENTS, 185
Debenture bonds, 278

in

stocks,

137
Government bonds,

Coupons, 278
Curb market, 278

DANGEKOrS

Gambling

118
Government
State, 118
Government
town, 118

[284

city,

bonds.
bonds,

Indeos

Government

bonds,

Listed stocks and bonds,

United States, 113

Gum

Life insurance, 224

chewing, 68

Liquor habit,

Home

banks, 262

Home, buying
How much to

210
save, 39
a,

Improvident, the, 19
Indebtedness, 146

the,

beyond

Living

269
our

means, 29

Loan and trust companies, 252

Loaning to

90

friends,

Long, 279

Industrial stocks, 155

Institutions for saving,

99

Making a show, 68
Margin, 279

Insurance, accident, 242

Margin, buying stocks

annuity,

Insurance,

210

on,

146

Market, curb, 278

Insurance,

fire,

Insurance,

life,

238
224

Market terms, 274

Marriage,

Investments, fake, 185

Investment

value

of

stocks, 131

saving

for,

39
Materialistic, the, 13

Means,

living

beyond

29
Mortgage, 168, 279
Mortgagee, 280
Mortgages, chattel, 183,
our,

Jeweley, 68

Keeping a bank account, 252

277

Keeping accounts, 264

Mortgages, real estate,

Lamb, 279

168
285]

Index
Mortgaging a
210
Mortgagor, 280

home,

Real estate mortgages,

168

Running

into debt,

146

Municipal bonds, 118

Natioxai. banks, 252

Safe deposit
272

oveii-dezssixg, 79

Saver, the, 19

boxes,

Saving, 39

O^wning a home, 210

Savings banks, 99
C0M3IEECIAL,

PaPEB,

277
Par, 280
Petty

Second mortgages, 168

281

Selling short,

Share, 281

extravagances,

68

Shaving, 68
Shoe-shining, 68

Pomt, 280
Pool, 280

Short, 281

Preferred stock, 280

Sinking fund, 281

Private

Show, 68

corporations,

280
Provident and improvident, the,

PubHc
281

19

Smoking, 68
Soda water habit, 68
Speculation, 96, 137
Speculative

corporations,

chances,

taking, 96

Speculating in

stocks,

137

QUASI-PrBUC COEPOEA-

Spendthrift, the, 19-29

Tioxs, 281

State banks, 252

Real estate
210

butts'g,

State bonds, 118

Stock, bank, 127

[286

Indeoo

common, 277

Stock, preferred, 280

Theatre, the, 68
Third mortgages, 168
Tips, 137

Stock, treasury, 281

Town

Stock,

Stock, fully paid, 278

Stocks, buying on margin,

bonds, 118
Treasury stock, 281

Treating, 269

146

Stocks, industrial, 155

Trousseau, 78

Stocks, investment val-

Trust companies, 253

ue

of,

131

Underwriting, 282

Stocks, listed, 279

Stocks, speculating

in,

United States Govern-

ment bonds, 113

137
Suppers, 68
Syndicate, 281

Value of stocks, 131

Taking advice, 83
Taking
speculative

Watered stock.
What some terms

chances, 96

for,

Working

Technical terms, 274

Terms, 274

287]

stand

274
capital,

282

liimm!!:,^LP^

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