The Washington herald., 1914-04-11
THE ARMY OF
SMALL INVESTORS
cCorx,ivb, 1914 rCA Kew, \

tCopyrisht 1914. By G. NJ Keys. New YGkJ
The president of the Pennsylvania
Railroad recently made the public state
ment that on the books of his company
there are the names OF nearly 10000
people who own stock Of the Pennsyl-
vania Railroad. He ventured an addi-
tional guess, presumably based on the
number of registered bondholders, that
there are more than 10000 investors in
the world who own bonds of the Penn
syIvania Railroad.
This statement is very interesting for
two reasons. The first reason is that II
shows the largest number of stockhold-
ers that the Pennsylvania ever had. The
second reason Is that II furnishes, for
the first time. fair guess at the pro-
portion OF bondholders to stockholders
in the case of one railroad. II Il were
possible to assume that there are two
bondholders to every stockholder, il
would be a new factor in reckoning the
number of people interested in corpor-
ate enterprises. II is not, however.
definite enough to be adopted as a COM
mon factor in making such calculations
and any conclusions based upon it must
necessarily be imperfect
The fact that the Pennsylvania, our
biggest railroad. now has something like
800 900 people interested in its securities,
is in itself a very significant fact II
means that there are more people buy
ing securities OF this type than ever
bought them before. The bonds of the
Pennsylvania are. Of course, considered
very excellent securities and they do not
yield very high returns to the investor.
The stock Of the Pennsylvania is con-
sidered by most cities to be a good stock
and IL does not yield nearly as big
return as many other well known
afp SacmrifiR9 considered
to be standard of their class.
The wonder Is where this new army
of investors comes from Ten years ago
there were almost as many people in the
United States as there are now, but there
were a good many less than half as
many people who owned the securities OF
this railroad. AS a matter of fact. so
far as the stocks are concerned. II seems
that there are six or seven people who
own stocks in corporations today to one
ten or twelve years ago. A financial
publication which has been carrying on
an investigation in this matter recently
published a table showing 2a6.oOO stock
holders in a group OF the larger railway
and Industrial corporations in 1901 and
approximately 10000 people in the same
corporations in 1915. The interesting ques-
ton is where that 100000 odd of people
came from and why il is that they have
bought stocks IN recent years and did
not buy them in former years.
For a long time the very little investor
had not much temptation to go into good
securities. He was, however. constantly
tempted, during this period, when he
was growing comparatively wealthy, to
go into all sorts and conditions of gamb-
ling enterprises. The get-rich-quick game
fiourished almost without interruption up
tG 1910. The postoffice authorities had
done something prior to that time, but
they really became active in that year
to crush out the most fragrant instances
OF financial schemes to rob the public.
The newspapers, the magazines, the lee
turers and even the ministers, recog-
nized at about that time that something
ought to be done and began to warn the
public strongly against this sort OF
finance. Nobody can calculate how many
people who otherwise would have gone
into reckless ventures OF this sort have
become stockholders. or even bondhold-
ers. OF municipalities and corporations,
but the number must be very consider
able indeed.
1t is astonishing in going over the list
of stockholders OF a corporation to dis
cover how many hold one and two shares.
These are, for the most part, very small
investors who would otherwise have
thrown their money away or spent it.
According to the tables. the number of
in the principal corporations
practically doubled from 1901 to 1906, and
doubled again from 1906 to 1911. In other
words it took five years to double the
list. From 1911 to 1913. the list increased
from $4,000 to 1.50o.ooo In other words,
in two years the list almost doubled
again. This was the most rapid increase
shown in any recent compilation. 1t
will be observed that the period from
1911 to 1913 has not been a good period
in the stock market. II has been a
period of declining prices. The average
high price of 20 of the best known rail-
road stocks in Wall Street in 1911 was
l23ss The average high price Of the
same stocks at the close Of 1918 was
around 1o4, so that these stocks show a
decline Of about 10 points in price.
the average high price OF a
group Of twelve industrial stocks in 1911
was SOS, while at the end OF 1913 II was
u, a decline Of 70 points.
II these figures mean anything, they
mean that the small investor has been
buying stocks as they went down. There
,,~eH 20 he a fhA0rv In Wall Straat that