CHAPTER XXIII.

INVESTMENTS.

This is a matter for the careful consideration of the man of business, as a safe and suitable investment of such funds [surplus capital] will add to his wealth in a continuous stream; while if they be placed without due precaution, they may not only prove a loss in themselves, but an injurious drag on the business from which they are derived. The chief points to be considered are that they shall be fully and readily available for use whenever your business may require them, and that they shall be invested in a good mercantile security.

JAMES D. MILLS.

HE reader must now understand a fact not generally supposed by the business man, that he here enters upon a distinct branch of money-making. In many of the pre

ceding chapters labor and capital have necessarily been combined for the making of money; yet money-making with money is a trade of its own, pure and simple; and the failure of many to learn this fact has led to great losses, and in some cases to ruin. The man who has made his dollar, and wishes to make it work in the earning of two, has reached a point where, in order to do it to advantage, he must have the requisite knowledge and apply it, or his dollar will presently take its departure for the pocket of

some one who better understands his business, and is shrewder and more far-sighted than he is.

No man can rest safe in his possession of money for investment, who does not come fully to appreciate this idea. Much toil, physical and mental energy, economy, and self-denial, are frequently lost through this ignorance. Wealth and comfort flee away; poverty and distress come instead; and the victims wonder ceaselessly why their lot in the world should be so hard. But if they will reflect for a moment that everybody else is struggling to get even what the hapless ones have kept, and that every device and scheme which cunning and ingenuity can invent is brought to bear to seize it, does it seem strange that one or a few can not resist all? No other trade is so intricate or difficult as the safe investment of money; but, like the mechanic arts, when once learned, how easy and how simple it is!

No person, then, having savings or other money to invest, should undertake the business without knowing the exact value of the thing he proposes to take in exchange for his money. The most simple and ready to hand is commonly the savings institution, where the depositor has only to ascertain the general standing of the bank, and if satisfactory make his deposit. His money will thenceforth draw interest, if left for a period of less than twelve months, at four per cent; if for a greater term, at five per cent per annum. Another mode, equally simple, is to take a ten-year

endowment policy in the best mutual cash company, which will entitle you to a share in the company's profits, and thus aid you in the payment of premiums. You will get your six per cent a year, more or less, and keep your life insured at the same time. This is preferable to the savings-bank, as making more for the money invested, if you only have the capital to go into it, and are sure of making your payments year by year. See further in our chapter on Life Insur

ance.

These two modes provide for investment of the smaller amounts of money. For those who can command larger sums, the bond and mortgage at seven per cent, or whatever a loan will command at the time, is the very best means of investment, if one is not skilled in financiering; and it is believed to be the swiftest means of realizing profits yet put upon any money-making course. In some States the legal rate of interest is higher, but in some even lower, than seven per cent. In any case the legal rate, on bond and mortgage, is the surest way of accumulation. The reason for this will be apparent on a little reflection, when it will be seen that the result is secured by a principle all-important in money-making.

When the amount loaned is suitably apportioned to the value of the property by which it is secured, the security is perfect. This depends much upon the intelligence and honesty of the attorney engaged to supply the deficiency of knowledge generally existing

in the lender, and to examine the security in every point and particular, to see that there is no flaw in its title or otherwise. Just here let every one who has money to invest pause for a moment and take a lesson never to be forgotten. If he as a lender intends to invest in any other security, let him take special pains to get an opinion of its value by one skilled in that sort of knowledge. But if you are not a lawyer, you can still often determine with reasonable certainty the value of your security, and undertake to loan your money on bond and mortgage upon it, taking the borrower's note as collateral security.

Next, as a simple and safe investment, are dividendpaying bank stocks. Here again careful investigation is required, though many buy such stocks without a single step in the direction of ascertaining their value or making a solitary inquiry of any one acquainted with the facts. Now, the books of a bank are always open for inspection to those concerned; and he who has in his head a proper notion of the value of money, will inspect them for himself, or engage some trustworthy person to do so, looking into the whole state of its affairs, before putting his money into the stock of the institution. Especially should the character and reputation of its officers be inquired into, and their style of managing the business be scrutinized closely. It is not to be presumed that because they occupy an imposing banking-house and have a large number of employees, this is a sufficient basis

of security, and will inevitably give dividends for your money. Investigate faithfully, and take advice carefully.

A prime principle of safety in this part of the business is this: Never invest in any stock till it has paid a dividend. You might just as well entrust your money to the hands of a man calling himself a merchant, and setting up his sign as a trader, who nevertheless has never made a dollar. By the merest chance he may stumble into success, and similarly may the stock happen upon a dividend; but the only sure and safe way is to let others take the risk if they willmen that can better afford to lose. Those who have but limited means have no right to take chances that are so much against them. Their little is their all, and certainly positive security should stamp the investment of every dollar they have.

On the other hand, no person who invests thus, not even the wealthy and perhaps careless capitalist, expects to lose. Regular subscriptions to bank stocks, as a method of investment when the character of the officers managing them is well known, may not be regarded as unsafe; and there is also an advantage in being among the earliest subscribers to such stocks, since the subscriptions are at par, and when the list is once filled up the stock can hardly ever be bought, except at a premium. Such examples of investment, indeed, are proper subjects for the advice of skilled financiers.