The Republican journal., 1910-02-17
THE PHYSICIAN AND HIS BANKER.
BY HAROLD T. SIBLEY,
Manager, Investment Department, Chicago
SAVINGS Rank and Tv7,st Co

Savings Bank and Trust Co.
Reprinted from the Chicago Medical Recorder,
4 Nov, 1909.]
The progress of scientific research, the
discoveries and inventions in every realm
Of human endeavor, the development of
commerce and business enterprise during
the past fifty years, have been due in
large measure to specialization, to the
thorough and minute training of our pro-
fessional men and our men of affairs
Banking has entered the ranks of the
professions, in that it requires a long
course of training and high degree of
expert knowledge. This is especially
true of that branch of banking which
deals with investments.
There is no class of men who under
stand the value of expert assistance
better than the members of that profess
sion in which special training is most
essential-the medical profession. 1t is
with the assurance that the physician
will understand this point that this arti-
Gle is written on the relations of the
physician to his banker, and especially to
the banker whose aid he seeks in select
ing his investments.
The average Individual in need of med
ical treatment selects his physician be-
cause of his known training, experience
and skill. He tells him his troubles and
follows his advice without question. 1t
is the belief of the writer that much the
same attitude should be assumed by the
client toward his banker, especially
when the client is physician. 1t is evil
dent that the physician, whose whole
training is in the sciences, and whose en-
tire interest is devoted to his profession,
can have little time to spare to the study
of finance. He must rely on his banker
in large measure for the selection of his
investments. For this reason he must
choose his banking institution with great
care. He must feel that its officers are
men whose honesty and judgment he
can trust.
The investor can have little knowledge
at first hand of the security of the bond
or stock in which he puts his funds. He
can neither spend the time nor the money
in making personal investigation of the
company whose securities he buys. On
the other hand, it is the business of the
bank, through its bond department, to
do both of these things. The properly
organized bond department, before pur-
chasing an issue of bonds, employs the
best lawyers, engineers and accountants
to examine thoroughly the condition of
the company whose securities are under
consideration. 1t knows at first hand,
through independent investigation, every
detail of the affairs of that company 1t
is the duty of the bank to safeguard in
every way the interests of the investor
in this security. Moreover, the bank
assumes a very distinct moral RESPONSE
bility that the conditions surrounding the
bond issue remain such that the interests
of it's clients are never endangered.
The banker who faithfully and eff
GENTLY performs the duty of safeguard
ing the funds Of his patrons, attains the
highest ideal of his profession. He per-
forms a service to his community, second
only in Importance to that which the pro-
| fessional man, through his training and
skill, is qualified to perform.
/ 1t is not the purpose of this article to
more than touch upon the great subject
of the selection of investments. It is
! the strcng belief of the writer that the
professional man should limit his invest
ments almost entirely to bonds, and
principally to municipal and first mort
gage railroad and public utility bonds,
| though the stocks of few of our oldest
railroad corporations should be included
in the ranks of safe investments. The
relation of the stakeholder and that of
/ the bondholder to the affairs of corpor-
alton are very different The stock
holder is a partner in the enterprise,
sharing it's profits and losses and trust
ing in its future development to bring
the large returns which he anticipates.
The bondholder, on the other hand, loans
money for certain specified period of
time to the company, holding the entire
property of the stockholders until such
time as his funds are returned to him in
! full. He assumes the minimum of risk.
! hp knows whom no bic
that the property of the corporation is
more than sufficient to protect him. He
is in no way dependent on future growth
or larger earning capacity for the safety
OF his income or principal. 1t seems to
the writer that it is far more important
to the professional man that the princi- |
pal OF the investment IN which he puts !
his surplus earnings should be safe, than
that its speculative possibilities should
| be large.
| Of the classes of investment bonds,
municipal bonds are the oldest, best
known and unquestionably the safest
The income which they return the in
weston is correspondingly small. Next
in point of safety come the first mort
gage bonds Of our great railroad systems.
Their income return is only slightly
better than that of municipas. The |
| OoilSlo VI Vic PuDllS oO1NlSc GOI pOI
which supply our cities with transporta-
ton, with gas, electric light and power,
and with telephones, have become very
popular within the last few years, and
this popularity is deserved. Their in
come return is relatively large, running
from four and three-quarters to six per
cent. They supply service which is
daily necessity in hard times as we'll as
good, and consequently their earnings
vary but little, as was shown conclusive
ly by their record during the panic of
1907, They combine in highest degree
safety and satisfactory income.
The investor, however, should not con
fine his investments to any one of thes-
three classes of bonds, but should divide
his money between them, thus obtaining
the best combination of security and |
high interest. Nor should he invest
more than a small fraction of his capital
in the bonds of any one municipality or
corporation. Keep the capital divided
into small parts; then, if in spite Of all
the care of the banker, anything should
happen, the harm done would not be
vital.
In conclusion, the writer wishes to
make an appeal on behalf of the banking
/ ,&-.-~