Forest City press. (Forest City, Potter County, D.T. [S.D.]) 1883-19??, 1917-12-20

It is not easy to form a correct
statistical conception of the program of
speculation. Thomas Gibson Investigated
1000 brokerage accounts spread over a
period of 10 years. and found that SO per
cent of the accounts showed final losses.
Leaving interest charges. commissions,
and taxes aside, 1t would thus appear that
30 per cent bought at higher prices than
shey sold. while only 20 per cent sold at
higher prices than they bought. Or, in a
anger sense, an overwhelming majority
bought in a boom and sold in a crisis,
while a minority bought In u crisis and
told in a boom. The reason for this fllog-
cal procedure is doubtless to be found In
The factor Of Grove psychology, as the
iverage investor busy when everybody
,uys, and sells when everybody sells,
while the shrewd investor buys when
everybody sells. and sells when everybody
buys.
There is a big panic about every seven
tears. as the years 1914, 1907. 1900, 1893,
ltc.. nave amply demonstrated. and with
IN these large swings there are medium
swings. II 1t were possible to educate
: part of the investing public to adopt
the Hetty Green system of keeping a cash
balance in the bank till a violent break
occurs. and then to step in. h above
mentioned unfavorable loss percentage
could be most happily r%eadjusted. Aside
from material advantages q great econom-
lc benefit could be attained by stabilizing
the security markets. n incidentally the
cratic earnings Of brokerage houses.
There 10 no scientific reason why the
business Of speculation should be subject
to q higher loss percentage thar any other
business. OF course. there are those who
will say that the best way to speculate
Is not to speculate at all. In answer 1t Is
first of all necessary to consider that 1t Is
difficult to draw q line between invest
YN0Nk nrA -onooNN1otSNn ne thu haitian. io
nothing but an investment or credit.
The Source Of Capital.
There are those who maintain that both
investment and speculation could he
eliminated, az. the Industries might just
as we'll be financed by the companies
themselves. Such experiments nave been
made by Lipton's Tea company. and in
the case of the German breweries. These
institutions accept savings from their
clientele. pay q somewhat higher inter-
est rate than the banks. and thus evade
an increase in fixed capitalization. 1t is
obvious, however. that the cost of such
q system cannot be much below the com
mission paid to an underwriting syndi-
cate. aside from the fact that only popu-
lar and well established concerns could
finance themseives his way. The de-
posits can be Withdrawn any moment.
while the fund secured through u bcnd
issue - advanced for a definite period.
1t o b entirely Impractical to finance
Q new enterprise along these lines. Then
there are those who would ask the banks
to finance the industries through direct
credit operations. 1t Il apparent, how
ever. that tho deposits Of q bank, tmls st
comply With the principle of liquidation.
and that . long term investment viii,
considerable risk would be q most danger
ous policy. When We thus. by efiminA-
eon. ers forced to return to our present
sysessn. u appears that those who advo-
cate eae compSeee axterminatlon OF the
system. should at least offer something