The Washington herald., 1914-03-14
WHAT A BANKER
PUT AWAY

Corynsht, 1911, by {. NJ. Keys. New York;
The head of big bank Gied not so long
ago and left a substantial estate 1t
contained the realty which he and his
family needed. namely a property in New
York City. country property on Long
Island and a small home in the noun
tains. II contained also a few evidences
of personal loans made as a matter of
business accomm odation TO his friends.
and few realty mortgages made for
much the same purposes
with these minor exceptions that estate
consisted almost altogether Of standard
bonds listed on the New York Stock
Exchange. They were not all active
bonds. Some of them were very quiet
public utility issues of good companies.
Others were underlying railroad bonds
seldom heard OF in the open market. and
the rest consisted of bonds that are
dealt in to the extent Of S00,Oo. or more
every year in the bond market.
In the appraisal of the estate. the Sc
curities were. of course. listed at their
market values. A relative of the banker,
however, is authority for the statement
that in his records the banker had n
careful tabulation OF the actual cost Of
the securities, a. well as the dates on
which they were bought The buying be-
gan more than thirty years ago. From
the time when he became a man OF rea-
sonabe wealth, the banker had been in
the habit of keeping a good deal OF. cash
ir his hands during normal times. When
lines became abnormal in such a way
as TO bring about decline in bond
market prices, he became a student Of
securities. and figured out how much
he would like To irVest. what he would
like to invest in. and what he wanted
to pay for the securities. He regularly
picked out about three times as many
securities as he wanted to buy. put his
prices very low and then watched the
list. II prices declined to the level he
had chosen as the place for investment.
he would take the first bonds that reached
tle prices he had set. When the amount
Of his funds was taken up in this way.
he withdrew his orders In the other bonds.
and raid no further attention to the mar
ket for the time being.
On the whole. according to this rcla-
tive. he was not trader in bonds Once
in long time, when he saw some issue
that seemed to him to he especially at
tractive. he would go over the list. if he
didn't have money in hand with which
to buy some OF these bonds, and pick
out some securities that had perhaps
run ahead OF their value. or that were
approaching maturity. or that were
otherwise not so desirable as when ne
bought them. and he would sell them to
make his new purchases. II does not.
however. appear that he spent much
time over his old list though 1t does
appear that he kept pretty well posted. in
a general way, on the conditions sur
rounding his investments at all times.
This he did in the natural course of his
business as a banker
Apparently the whole care OF his funds
which gradually grew to large size. gave
him very little worry or concern He
used to say OF himself as buyer that he
had three principles and that any one
who had the same principles and man.
either worry or loss in investment. The
principles were:
Buy only the soundest securities
Buy only when prices are far below
the average.
Don't be trader.
These principles. it will be observed,
are not designed for the consumption of
the ordinary layman investor. Such an
investor does not know. in the first place
what are the soundest securities. In the
second place. he does not know compara-
tive prices and average prices: and in the
third place. he does not know that there
is any risk or worry about trading be-
cause, as a rule, he knows nothing at all
about II and does not indulge in il 10 any
large extent. The average investor when
he buys for investment, thinks that he |
buys to keep, puts his securities away
and wants to forget about them.
The banker, whose life was spent in |
dealing with financial matters. studying |
credit. reading balance sheets and in |
come accounts. and keeping track, in a |
of aff ffair lie
its quite easy to know what corpora /
tens. municipalities. and States. enjoy |
n good credit He had ample records. |
also, from which to inform himself about |
the properties upon which securities are |
R lien. about the mortgages that secure |
the I'm, about the management of the cor ]
porations, and about the income which |
they enjoy. Most men in the banking |
principles can look up in five minutes |
almost any bond of any steam railroad |
In the United States tell you what Sc
cures II. when the mortgage was made.
how long II runs. who e trustee Is. and |
how many other bonds or stocks there
are following this bond on the same |
and what interest or dividends
they pay. II he finds the bond in ques-
tion to be an old underlying lien on n
necessary piece of railroad belonging to
4 big system lie the Pennsylvania, New
York Central. the Burlington. or any |
ether standard railroad. he knows with
put any further question that IL is Il
safe proposition. In another minute or
Two. he can look up the record of the
prices at whi.h 1t has sold for ten or
Twelve years back. so that he can tell
you the lowest price and the highest
price at which It has sold during tina.
time.
That is professional information. pos
sibiy. but II is at tho disposal Of the
whole investment public. because any L
tanker. or broker. or investment adviser.
VINO Is worth his salt, will be glad to
COX up all these facts and report them
hCnestiy and truly to the investor, so'
hat the latter may form his own con-