Chapter XXII - Investments

  • 1. What is an investment?
  • 2. Savings.
  • 3. Capitalists.
  • 4. Stockholders.
  • 5. Kinds of stocks.

It is a remarkable fact that many men who have shown remarkable shrewdness in conducting a business in which a fortune may have been accumulated, exhibit the judgment of children when it comes to making investments.

There are able lawyers who have made fortunes in the practice of the profession which they understood, only to lose them by investments in mines or other ventures, about which they knew absolutely nothing but what was told them by the scheming speculator and smooth-tongued promoter.

As has been intimated before in these pages, there is a great difference between saving through and hoarding through a spirit of miserliness.


Every wage or salary earner, no matter how small his compensation, should try to lay by something of that little as a provision against the unproductive days.

No matter how small the amount a man has set aside, after paying for life's necessities and meeting all just debts, he is to that extent a capitalist.

The miser would hide his savings out of reach, but the man with the foresight to save will usually have the judgment to place these savings where they will fructify and grow, producing the fruitage known as interest.

The young man or the young woman, or any one else who places his little accumulations in a savings bank, has begun a form of investment that may, if persisted in, place him or her above want, even if it does not entitle either to a place on the lists of great capitalists.


The capitalist not only has money of his own to invest, but he may and very often does need more money properly to exploit the enterprises in which he is engaged.

Money loaned to such men, after being assured of their ability and integrity, is an advantage to the lender as it is to the user.

The lender's profit is assured if the enterprise does not fail, and the added capital not only insures against failure, but it may enable the manager to succeed beyond any expectations he could have if forced to carry on the work with only his own resources.

The capitalist may choose to buy land in the suburbs of a city and build thereon a house to be sold or rented. This should always be made to secure the money borrowed.

A capitalist may establish a fund from which, on good security, the business men of the community may obtain loans, for which they get a higher interest than that which they undertake to pay to those whose money they are using.

Again a capitalist may undertake to loan to farmers, who have not the means to carry on the work, but who are anxious to make their lands more productive, through drainage and crop rotation. In this case the money loaned is secured by the usual bond and mortgage.

Or it may be that another body of men is anxious to start a great manufacturing enterprise in the neighborhood, but has not enough money to place the venture on a paying basis.

In the latter case it appeals to the capitalist, and he, though not bearing enough available means of his own, undertakes the work with the knowledge that he can rely on the small investors, whose contributions he has before managed successfully.

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