Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-15
INVESTMENT TRUST
GROWTH DESCRIBED
Commerce Department Off.
CiaI Praises New Form OF
Thrift Promotion.

Lauding the Investment Trust as one
of the great stabilizers for security
prices and insurance against investment
hazards, L. Seth Schnitman, chief OF
the Survey of Current Business Division,
Department Of Commerce, pictured the
amazing growth and methods OF oper-
alton of investment trusts, in talk
over the radio last evening. Speaking
on Mass Investment" Mr.. Schnitman
said In part:
1.-THE rise Of American investment
trusts from resources of only about five
million dollars in 1924 to about one and
one-half billion dollars at the present
time Is one of the most important and
most spectacular single developments In
the field of American finance. No other
institution has ever witnessed sucn
growth in such short time, not even the
banks with their resources OF II billion
or the life insurance companies with
resources of Is billion or building and
loan associations with assets OF billion.
Aids to, Thrift.
"The savings banks and building and
loan associations, life insurance, Liberty
bonds, distribution Of stock to employees
and customers on a partial payment
plan by an increasingly large number OF
our corporations, all of these factors
and more have brought to the American
public greater consciousness on the
subject of thrift, savings and invest
ment
But the safe investment of money at
good yields is in no way an easy mat
ter. Investing, like medicine, is q
science. The operation may be success
full, but the security may lose Its
strength. Assuming capital to be lin
tied, there are not many investments II
confined to one or two securities where
mistakes would not be costly. Most In
vestors do not have enough capital to
properly diversity, or If they do, they
do not possess sufficient specialized
knowledge Of business and industrial
conditions to correctly diversity.
Where the individual Of small re-
sources can invest in only one or two
securities, the Investment Trust, with
edge, can invest In large number OF
securities, thus cutting down the risk
of investment. The average individual
of small resources thinks he invests
when in fact he really speculates or
even gambleS-perllaps upon the "tip''
OF some friend, trusting that his gamble
may yield profit. The Investment
Trust does not concern itself primarily
with immediate speculative profits. The
trust visions ahead, not an hour or q
day, like the trader or speculator-
not week, month, or year-but the
longer period.
'The stock market is now front page
news. Estimates place American in
vestors at between 100000 and 20,-
100000. The average secondary school
student Is talking stocks-dreaming Of
the day when he, too, may see 500 or
1000 per cent profit upon some small
investment. Whittier will it lead?
Needless to say, the average individual
OF this type IS, in the strict sense of the
word, q gambler. Investment trusts,
properly managed, take investment out
OF this nefarious field, and perform not
only an economic but event q philan-
thropic service in reaching out for the
funds OF this large group of would be"
investors.
Investment Policies.
There is nothing new In the state
ment that the rising profits of Ameri-
can business 60 to the, owners of COM
mon stocks. And so 1t Is with apprecia-
ton of this fact that by far the largest
percentage Of resources of investment
VI uoVo dAC AAfCo1CQ III COulIIlUII SbOCkS Oh
basic industries whose growth is vir-
tually assured as a corollary of the
growth Of the Nation.
Current reports of corporations have
never shown business more efficient,
scarcely more prosperous. Big business
is getting bigger and still more ef1cient
and prosperous. Astute investment in
these enterprises, however, is not an
easy matter, but in the hands Of the
Investment Trust investment becomes
more Of q science.
las investment trusts grow, and
believe they will have resources of $685.
000,000,000 within the next 10 years,
their investments will tend to stabilize
the market for the securities which they
purchase and hold. The wide specula-
tive fluctuations in the stock market,
which hitherto have been so injurious
to the field of investment, have been
largely due to recurrent rushes on the
part of uniformed and unframed I'm
vestors' to buy stocks at inflated values.
Just so long as investment trusts con-
tinue to buy sound securities predicated
upon sound specialized analyses, so will
this new creature In American finance
come to be the stabiliZer for security
prices and the insurance against in
vestment hazards"