New-York tribune., 1905-01-22

I have stated repeatedly in this column and
endeavored to emphasize the statement very
strongly that 1t is impossible for any person OF
moderate means to make money by speculdtihs
in the irregular and uncertain stock marke.: mar :
1 have tried from time to time TO point out the
dangers which attend all speculative invest
ments. 1 have said that should one hundreo
men each with S1O0000 go into the stock mar
ket for the purpose of increasing their wealth
by means of speculation in listed and unllsted
securities. ninety-nine out of the one hundred
would go out of the stock market without
dollar in very few months
I have said that the irregular and uncertain
stock market, shorn of its gilt and glitter. Is
nothing more nor less than green cloth around
which should gather only gamblers daring anu
reckless.
NV work is has been, and Will be to point out
course TO investors for a safe. profltab bic In
vestment of money without the necessity Of as
Stunning the great risks and long chances IN
vOlved in connection with stock market invest
ments and speculatiOns.
Last Tuesday received letter from a we'll
known broker in a Massachusetts city, reading
follows:
II have been a constant reader of your column
of Financial Logic. and know full well that what
you say is true-that It is practically impossible
for any one to make any money In speculative
stocks. providing they keep at (which they
always do in ninety-nine cases out OF every one
hundred-untn all is lost
'I have come to the conclusion that good
sound investment in a small corporation Is much
preferable TO the speculative securities quoted in
the daily papers. am in the stock brokerage
business, and write you this letter because 1
know from experience that you are preaching
sound doctrine. / have saved and now have
in bank few thousand dollars which would
like to invest in something that Is good and Sc
cure-that pays n good fair rate Of interest and
request that you let me know just what you
would recommend me to invest this money in,
being assured that I will be governed entirely
by the advice which you give me- In the mean
time, request that you treat this communtca-
ton as strictly confidential"
shall treat the letter in the strlctest conf
dence. as I do all letters. At the time. this
letter coming from a broker-a man who has
stood by and watched the market wabble up and
down. always attended by loss and disappolnt-
ment TO investors-weIl I have taken the liberty
of printing the letter because feel that 1t Will
1 wish 1 could impress strongly upon my
readers the fact that the mere size OF corpora
tion-the amount Of its capital stock-signifes
nothing.
We are all more or less familiar with gigantic
over-capitalized concerns. which come into exist
ence with a flourish of trumpets because they
are stocked UP to the extent of twenty thirty
forty, fifty or one hundred million dollars.
OF course, that sounds very impressive, and
there are in this broad land many who are de-
ceived thereby. But what does II all really
mean? Merely that In order to pay dividends
earnings are necessary. and the history Of many
of the big market footballs is, that the great
porations. with millions Of watered stock find II
impossible to force the earnings sufficiently to
Pay even the most meagre dividends
1t is very rarely that recommend invest
ment iu either preferred or common stock of a
corporation with more than 81 100000 or So, ,OOO.-
600 capitalization. and always I must know all
about the earning power Of the companies.
must know all about the management. I must
know that 1t is right that 1t is honest. that the
business is being conducted in the interest of all
stockholders and for no other purpose than 70
make money for every and woman who
may have dollar invested in the enterprise.
My favOrite stocks those Of small corpora
tfons- corporations Of small capital but with
big earning power-corporations that declare
and pay dividends with clock-like regularity,
without at eny time taking into account the
VY0aI -
quotations of the stock. They have nothing to
bolster up-nOthirg to knock down. They are
In business and have watchful eve the in
tersst of all their shareholders at all times tits
no. necessary for them to take into account
what the financiers Of Wall Street think about
their actions. or what they do not think.
It is not necessary for them to bother their
heads about the matter at all.
And yet look at the other side of the picture
IL is neither pleasing, pretty nor pleasant Divi-
dends on big speculative stocks are often paid
or not paid simply as a stock market conven-
fence. -.- n.
Officials OF a great corporation get together
aud declare or pass dividends as II may suit
their private interests. 1t has been absolutely
proven many and many time, that the officers
of tOp-heavy railroad Industrial and mining
securities have voted. to pass a dividend because
they themselves were short Of their own stock
Think of it! Men TO whom the destinias 81 a
great corporation are entrusted-who hold
within the palm. of their hands practically
earned savings of thousands whose investments
they handle. Think OF these men dabbline In
chlps, and with as little regard for their share
holders welfare.
If were given the power to place on the stat
ute books of this country. one law. that law
would be TO make 1T "A penal onfense for the offi-
cial of any corporation to trade either directly
or indirectly, in the shares of the corporation in
Whlch ne is interested, so far as the stock mar
ket is concerned.
man has legal nor moral right to let his
own interest hinge on the boosting or the lower
ing OF corporation securities, in the conduct OF
which he has a vote.
If such law as that were upon our statute
DOCKS, fewer great corporations would find il
necessary to freeze out shareholders for the pur-
pose of reorganization, and the savings ana
fortunes of countless thousands would be res
cued which are now swept away every year by
depreciation IN values as a direct result of
stock jobbing manipulation.
III were permitted to give an accurate nm
colored report OF directors meeting OF any one
of the great speculative Corporations and tbs
public were permitted to read the indisnation ~
the people would be almost great enough 10 da-
gether.
Around the magnificent mahogany tah,as
gamer men whose first thought Is all too often
OF their private pockets. Within the handsome
rooms dwells no regard for the thousands ~
small shareholders whose comforts OF life de-
pend upon the delberations of the day. Whether
the stock snail be further watered: whether mora
bonds shall be issued: whether a dividend shali
De declared or passed-tO the misery Of many
theSe Things that ought TO be sacred In their
character are often decided by our great dnan-
ciers. the gamester fixes his loaded dice Ara
woe to the unlucky moderate investor who hap
pens TO get tangled up In such devicest
OF course. do not condemn all OF the great
corporations l 90 not claim that the directors
OF all the great corporations are dishonest and
manipulate stocks for their own private gain
am not foolish. Some of the great corporafiors
are honestly conducted in the interest ~ an
stockholders; but do maintain that the less
any person OF small. or even moderate means
has TO do with the speculative whirlpool OF wall
Street. the better IL will be for him
There are other and better ways for the In
Of m