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Digitized by the Internet Archive 
 in 2017 with funding from 
 
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 https://archive.org/details/financialcourtshOOroll 
 
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 A FINANCIAL 
 COURTSHIP 
 
 OR A PLEA FOR 
 CONSE RVATIVE 
 INVESTMENTS 
 
 BY 
 
 Frank W. Rollins 
 
 B OSTON 
 
 NATHAN SAWYER & SON, PRINTERS 
 No. 41 Pearl St., cor. Franklin 
 1906 
 
Copyright, 1808 , by 
 
 E. H. Rollins & Sons, 
 
C 0 w\w\erce avVyivaS Sh op» 
 
 PREFACE. 
 
 One of our stenographers said to me one day, 
 “Why don’t you get up a book or pamphlet which 
 would be of some service to women in making 
 investments? Put it in plain, understandable lan¬ 
 guage, avoiding technical terms. You have no idea 
 how ignorant many women are of the names and 
 very rudiments of things.” 
 
 I knew from experience that she was right, and 
 I have tried to carry out the idea. In a life insur¬ 
 ance circular I recently saw the following statement, 
 which I do not vouch for, but it is undoubtedly 
 approximately true : 
 
 “But three men out of every one hundred 
 acquire a competency by the age of sixty-five, and 
 three out of every five who have so acquired a 
 competency by that time of life lose it between the 
 ages of seventy and seventy-five. Nine women out 
 of every ten lose their money if it is not placed in 
 trust.” 
 
 This statement is pretty sweeping and would be 
 hard to prove, but if only approximately true, it 
 gives me a reason for offering this little pamphlet. 
 
A•H-K' 
 
 33 £,,£> 
 
 "K&53f 
 
 A FINANCIAL COURTSHIP. 
 
 CHAPTER I. 
 
 When James Allen died, he left his two daughters a 
 small but comfortable home and fifty thousand dollars 
 of life insurance. He had been a quiet, taciturn man, 
 taking no one, not even his own daughters, into his 
 confidence. Not until he was buried and his will was 
 read, did any one have the slightest idea of his posses¬ 
 sions. He had held the position of Clerk of the United 
 States Circuit Court for forty years and had lived com¬ 
 fortably, educated his daughters and performed his 
 duty as a good citizen. His wife had died four years 
 before him. It now appeared that he had adopted early 
 in life the idea of living close to his income, saving 
 enough each year to pay his life insurance premiums, 
 and relying on the insurance to take care of his 
 family when he should be gone, — rather a dangerous, 
 but not unusual, policy. 
 
 He had never discussed business at home, and his 
 daughters were absolutely ignorant of the first princi- 
 
6 
 
 A FINANCIAL COURTSHIP. 
 
 pies of finance. They had received the usual common 
 school education and were now well advanced toward 
 middle life, Hannah being forty-two and Mary, thirty- 
 two. 
 
 When the first shock of the unexpected death was 
 overcome and they found themselves thrown wholly 
 upon their own resources they were staggered by the 
 weight of the responsibility. It is true they had a 
 comfortable home and a modest fortune, but they were 
 entirely without male kith or kin. There was no man, 
 no near relative, they could go to for advice, and, with 
 the instinctive dread of New England women of expos¬ 
 ing their affairs to outsiders, they hesitated to take any 
 one into their confidence. 
 
 It was the evening following the funeral, and the two 
 sisters in their new black gowns were seated in the 
 little, lonely sitting-room, reading their father’s last 
 will and testament, which was very brief, and left all 
 he possessed to them jointly. 
 
 ‘ ‘ I never had the slightest idea of how much father 
 had,” said Hannah, staring into space. 
 
 “Nor I,” said Mary; “we always had enough, but 
 we lived very economically, so I suppose we can go on 
 all right.” 
 
 “Yes, but you must remember we don’t have father’s 
 salary any more.” 
 
A FINANCIAL COURTSHIP. 
 
 7 
 
 “ That’s true; I never thought of that. Can we live 
 on what he left ? ” And an anxious look came over the 
 face of the younger woman. 
 
 “We must. It isn’t as though we were young and 
 could go out and teach or become stenographers. We 
 are almost too old to begin now, and it doesn’t look, 
 Mary, as though either of us would get married.” A 
 sad little laugh followed the words and the quick tears 
 sprang to the gentle eyes of the younger sister. The 
 word “ spinster” was indelibly stamped on both their 
 good, honest, kindly faces and they knew the world 
 would pass them by for fresher and more brilliant ones. 
 It was only one more of the sad little home tragedies of 
 hope deferred and at last surrendered and merged into 
 gentle resignation; a loss to some man and to the world, 
 for such women make the best wives and mothers. 
 
 “Well, dear, there are worse things than being 
 single,” said Mary. 
 
 “I suppose so, but I can’t quite see what, some¬ 
 times,” straining the long, slender fingers together in 
 her lap. 
 
 ‘ ‘ Why, look around at the unhappy homes you 
 know.” 
 
 “Yes, dear, but they have lived, at any rate. They 
 know or knew the joys as well as the sorrows of life, 
 while we — well, we are two old maids ! ” 
 
8 
 
 A FINANCIAL COURTSHIP. 
 
 “ Oh, well, we can have some fun, too. Let’s cheer 
 up and decide what we are going to do. What’s the 
 next move?” said the younger woman, poking the fire 
 vigorously as if it were an adversary. 
 
 Hannah, somewhat ashamed of her self-exposure, 
 wiped her eyes and glanced at the will again. 44 One 
 thing we don’t have to worry about,—we have a 
 good home with no mortgage on it. Father had a 
 horror of mortgages. I heard him say once that 
 a man with a mortgage on his house was a slave.” 
 
 “ But how long can we live on $50,000 ? How much 
 shall we spend a year ? How many years are we likely 
 to live ? What shall we do if we live longer than the 
 money lasts? ” These questions rolled out in a torrent 
 and it was plain that the younger sister had more to 
 follow. 
 
 4 ‘Wait, wait, Mary, one at a time. I don’t know 
 much about it, but I suppose it’s like this,—father has 
 left us this $50,000 and it’s clear that he thought it 
 was enough for us to live on the rest of our lives. He 
 was a careful, prudent man, and that’s the idea and 
 intent of his will and his provision for us. You seem 
 to think we are going to take this $50,000 and bury it 
 in the cellar, and when we want a new gown just go 
 down and dig out a ten dollar bill and buy it, and so on 
 till it is all gone.” 
 
A FINANCIAL COURTSHIP. 
 
 9 
 
 46 Well, I must confess that was about my concep¬ 
 tion of it, dear.” 
 
 “ We must live on the income of it,” said Hannah 
 proudly. “ We must not touch the principal.” 
 
 “Yes,” gasped Mary, “but how do you get the 
 income? Who pays it and what for? What is 
 income, anyway?” 
 
 “We ought to be ashamed to be so ignorant, but 
 how is a girl who never handled over $25 at one time 
 in her life, and who never even heard money matters 
 discussed at home, to know anything about it? Why, 
 the income, I suppose, is what you get from your 
 investments.” 
 
 “But how do you make investments? Where do 
 you go?” 
 
 “I don’t know. Some bank, I suppose. Oh, I 
 know, the magazines are full of things. Don’t you 
 remember? You’ve seen them hundreds of times. I 
 always read them, they look so attractive. Let’s see,” 
 reaching for one of the popular magazines and hur¬ 
 riedly turning the multitudinous pages of advertising 
 matter at the back. 
 
 “ Here’s one ; just listen : 6 100 per cent, profit; send 
 us $100 and in six months we guarantee to return you 
 your money and $100 additional.’ Just think of that! 
 Why, we could put in the whole $50,000 and double 
 our money.” 
 
10 
 
 A FINANCIAL COURTSHIP. 
 
 “ My ! that would be fine; but do you suppose it is 
 true ? Is it safe ? ” 
 
 “They guarantee it.” 
 
 4 4 But who are 6 they ’ ? ” 
 
 “Here’s another: ‘Banking by mail, 6 per cent, 
 compounded annually. Sums of any size received. 
 
 The Union Trust Company of L-.’ That sounds 
 
 more reasonable. Don’t you think 100 per cent, 
 seems pretty large? Here’s another: 4 The K. T. Oil 
 Company — 300 per cent, profits ; no risk; stock in 
 $10 shares. Send for prospectus.’” 
 
 “Well, it seems easy enough to invest, doesn’t it? 
 Such a magazine wouldn’t publish those advertisements 
 unless the people were honest, would it?” 
 
 “I don’t know,” said Hannah despondently; “we 
 are always reading in the papers about the failures of 
 companies and about bunco schemes. How is one to 
 know? Oh, I wish we had a brother or an uncle or a 
 man of some kind. It’s pretty hard for two lone 
 women with absolutely no knowledge to do the right 
 thing. And just suppose we should do the wrong 
 thing and lose part or all of our money. Do you 
 realize what that might mean? Did you ever see a 
 poor-farm, Mary? Did you ever go into one? Did 
 you ever inhale the pauper smell? Oh, it makes me 
 sick to think of it.” 
 
A FINANCIAL COURTSHIP. 
 
 11 
 
 “We mustn’t make the mistake, then, dear; we 
 must go to some one who does know, some one we can 
 trust. We must study these things and know some¬ 
 thing about them. Come,” said the younger girl 
 bravely, “we will put a good face on this. We have 
 the average amount of brains and we can learn what is 
 right. Don’t give way,” getting up and putting her 
 arm around her sister protectingly. 
 
 ‘ ‘ But to whom can we go ? ” 
 
 “ Well, there’s Mr. Asquith at the bank.” 
 
 “ Oh, you know what a mean, secretive old man he 
 is ; I wouldn’t trust him.” 
 
 “Mr. Appleton, the president of the street rail¬ 
 way.” 
 
 “ He’s too rich and grand to bother with our affairs.” 
 
 * ‘ I know — Mr. Stanley, that new lawyer who 
 came here from Boston for his health last year. 
 They said he was in the banking business once.” 
 
 “Would you dare to go to him, dear? He seems 
 to be a splendid man. I like his eyes and his good, 
 aquiline nose and his square jaw. He looks truthful. 
 But why should he bother about our poor affairs ? ” 
 
 “ I think he would take an interest,” replied Mary, 
 getting behind her sister to hide a telltale blush. 
 “ You know I met him at Mrs. Coleman’s tea and have 
 seen him once or twice at the Golf Club since.” 
 
12 
 
 A FINANCIAL COURTSHIP. 
 
 ‘ ‘ Have you ? I didn’t know you had met him; you 
 never mentioned it to me.” 
 
 ‘ ‘ I forgot, dear. Shall we go to see him to¬ 
 morrow? ” 
 
 “ If you think he would advise us. I can’t think of 
 any one else and he does look honest.” 
 
 The next afternoon the two sisters timidly entered 
 the office of Mr. Edward A. Stanley and were pleas¬ 
 antly received by that gentleman. Mr. Stanley, while 
 educated for the bar, had spent most of his life in the 
 banking business; but, having made a modest fortune 
 and finding that his nerves were giving way, he gave 
 
 up his business in Boston and moved to S-, 
 
 where he played at practicing law, but really spent 
 most of his time on the golf links. These two women 
 had, with feminine instinct, made a correct estimate of 
 his character. He was distinctly honest. He was also 
 a man of wide knowledge, broad experience and excel¬ 
 lent judgment. It was very fortunate for them that 
 they fell into such good hands. He was old enough 
 to have had experience, yet not so old as to have lost 
 the vigor and virility of youth. 
 
 It did not take them long to state their case, the 
 talking being done by the elder sister, Mary remaining 
 strangely silent and distrait but very attentive. It 
 
A FINANCIAL COURTSHIP. 
 
 13 
 
 was, of course, a very simple matter, but Stanley saw 
 at once that what they wanted was not simply to be 
 told what to put their money into but that they needed 
 instruction. They were as ignorant of finance as a 
 toad is of skating, so he said: 
 
 “I am going to speak very plainly to you, and do 
 what I would do for my own sisters, if I had any.” 
 
 4 ‘Oh, will you? That’s just what we want!” 
 exclaimed Hannah. 
 
 ‘ ‘ I could very easily invest your money for you at 
 reasonable rates of interest, and safely, but, left alone 
 as you are, you ought to know something about finan¬ 
 cial matters. You ought not to be left to the mercy 
 of every ‘ get-rich-quick ’ advertisement, every chance 
 promoter who comes along with a tongue as smooth as 
 an axle newly oiled. You ought to know at least the 
 rudiments of finance; you ought to have the weapons 
 of defence and know how to use them. Now, I’ll tell 
 you what I will do. I’m not a very busy man. I have 
 just enough to do in taking care of my own property 
 and my small practice to keep me from going to seed 
 mentally, while I devote the most of my time to golf 
 and other important matters. I will undertake to 
 teach you what you ought to know. I will put my 
 time against the enjoyment of your society and there 
 will be no charge. Let us start fairly and understand 
 
14 
 
 A FINANCIAL COURTSHIP. 
 
 each other. I know you and your kind well enough 
 to understand you would accept no gratuity at my 
 hands, but I am thoroughly in earnest when I say I 
 shall enjoy doing it, and that it will not interfere with 
 any of my work or plans.” He spoke earnestly to 
 Hannah, but out of the corner of his eye glanced at 
 Mary. Again, that blush. 
 
 For the first time the younger sister spoke: “I 
 don’t see, Mr. Stanley, how we could allow you to do 
 it for nothing.” 
 
 “Oh, but, Mary,” broke in Hannah, “he says he 
 will enjoy it. I am sure it is most kind, Mr. Stanley, 
 and we shall be only too glad to accept.” 
 
 “All right,” exclaimed Stanley, looking rather 
 triumphantly at the demure face on his right. “ When 
 shall we begin? We must go at it methodically and 
 begin at the beginning. Let me think,” looking down 
 at his desk for several moments, evidently turning 
 something over in his mind. “You won’t want to 
 come to my office every day; suppose I call at the 
 house evenings and we have lessons there ? ” 
 
 Now both sisters blushed and it was Hannah’s turn 
 to be embarrassed. 
 
 “ Why, of course, if you don’t think” — 
 
 “All right. That’s settled,” exclaimed Stanley, 
 without giving her time to voice her fears. He knew 
 
A FINANCIAL COURTSHIP. 
 
 15 
 
 what was passing through her mind and how she was 
 saying to herself, ‘ 4 What will the neighbors say ? ” and 
 so forth. 
 
 “ I’ll call to-morrow at eight.” 
 
 A cheerful fire welcomed Mr. Stanley the next 
 evening and it was difficult to determine whether it 
 was the warmth from the hearth or something else that 
 made the cheeks of the sisters glow. They looked 
 almost pretty as they received their guest. At first 
 they were a little embarrassed, but he soon put them 
 at their ease by taking up the subject in a plain, matter- 
 of-fact way. 
 
 ‘ ‘ I’m going to assume that you are absolutely 
 ignorant on the subject of finance and investments, 
 although, of course, much that I tell you will be an 
 old story; and that reminds me of an incident in my 
 business. 
 
 “We received a letter one day from a woman living 
 in an interior country town, asking for a circular 
 describing a certain bond on a western city. Thinking 
 that the woman wished to make a purchase we imme¬ 
 diately started one of our salesmen off to see her. It 
 was necessary for him to travel some hours on the 
 cars and then drive about five miles into the country. 
 On arriving at the house he found the woman hanging 
 
16 
 
 A FINANCIAL COURTSHIP. 
 
 out clothes. He stated to her he came from our house, 
 and that we had received a letter inquiring about a cer¬ 
 tain bond, and that he was there to tell her about it. 
 She replied: 6 Oh ! I did not want to buy any bond, 
 but I used to live in that town, and I thought I would 
 like to see your circular to see whether the town had 
 improved any.’ 
 
 66 Not knowing what you do know, I will begin at the 
 beginning and you can absorb as much as you need. 
 Here are some blank books and pencils, and I wish you 
 would make notes as I go along, for I shall examine 
 you very severely. You know this is a real school,” 
 he added, with a quaint, winsome smile. 
 
 “ MONEY. 
 
 4 6 In order to invest, you must have money. Money 
 is a commodity which represents value or has value 
 itself. Theoretically, you can’t get money without 
 giving an equivalent for it, either in labor, land, 
 merchandise, or something of recognized value. The 
 money you have inherited was earned by your father 
 by a lifetime of labor. Now money, like human 
 beings, must work to get the best out of itself. If 
 you bury your money in the ground, you get nothing 
 out of it beyond the miser’s feeling of possession. 
 Therefore, as soon as one accumulates any surplus 
 
A FINANCIAL COURTSHIP. 
 
 17 
 
 beyond what he needs to feed and clothe himself, he 
 tries to set it at work for him and that, of course, is 
 the secret of all wealth, the magic but simple process 
 by which nearly all the great fortunes have been cre¬ 
 ated ; not only does the man work to earn more money, 
 but the surplus of his previous earnings toils for him, 
 resting neither day nor night, for interest goes on days 
 and nights, Sundays and holidays, three hundred and 
 sixty-five and one-quarter days in the year. There is 
 no seventh day of rest for interest, no Fourth of July, 
 no Labor Day ; it toils and moils eternally. 
 
 “ ‘But what is interest?’ you may ask. It is the 
 wages of your money, if you look upon it as a laborer. 
 It is what some person is willing to pay you for the 
 use of it. We will imagine a man has discovered 
 some new way of making cotton cloth. He has a 
 valuable idea, but no money. He hears that you have 
 $50,000. He comes to you and says : ‘ If I had your 
 $50,000 I could put up a small mill and make cloth in 
 my new way, and I could make $25,000 a year over 
 and above all expenses. If you will let me have your 
 $50,000 I will pay you 6 per cent, a year for it, and 
 in a few years I shall have earned enough to pay you 
 back the $50,000.’ Now you can figure that out 
 easily: 6 per cent, on $50,000 is $3,000; deducting 
 $3,000, which he would pay you annually for interest, 
 
18 
 
 A FINANCIAL COURTSHIP. 
 
 or for the use of your money, would leave him 
 $22,000, net annual profit, which he could put away 
 to repay your principal; or he could, in turn, set 
 that amount to work again by enlarging his mill 
 or investing it. Have I made it clear to you what 
 interest is?” 
 
 “Yes, I see that clearly,” answered Hannah, who 
 had made an occasional note, while Mary had simply 
 glanced at the speaker’s face shyly once in a while f 
 saying nothing. 
 
 “We have seen what money is,” he went on, “ and 
 that to get the best out of it we must make it work 
 for us. That is all very simple and elementary and 
 something that everybody probably knows; but right 
 here the real trouble begins. What kind of work 
 shall our money do for us? How shall this useful 
 servant be employed? What can it be trusted to do 
 safely? Whom can we trust to employ it? These 
 are questions as old as the world and as fresh as the 
 newly risen sun. As soon as one has earned a dollar 
 of surplus these questions begin to arise and they last 
 as long as there is a 4 shot in the locker.’ Some learn 
 what to do by long, sad and costly experience, some 
 are taught by prudent advisers, some know by intui¬ 
 tion, but the great mass never learn at all, and the 
 world is full of human ghouls who live by preying on 
 
A FINANCIAL COURTSHIP. 
 
 19 
 
 the ignorance of the great mass who never learn. All 
 these advertisements which you see so attractively dis¬ 
 played in the papers and magazines, promising 10, 20, 
 30 or 100 per cent, profit, are the webs spread to catch 
 the gullible human fly. Doubtless you have already 
 been reading them and have thought of doubling your 
 money in a year. Isn’t it so ? ” 
 
 The sisters smiled guiltily and assented. 
 
 “I thought so. Hence these lessons. To the 
 financier it is simply incomprehensible that people 
 should be drawn into such transparent swindles, but 
 he forgets that finance is his trade, that he knows it 
 root and branch, while to the average man, and espe¬ 
 cially to the average woman, it is a sealed book, as 
 incomprehensible as the mechanism of a fine watch to 
 a five-year-old child.” 
 
 “But, Mr. Stanley,” said Mary, “would a high- 
 class magazine publish fraudulent things of that kind ? ” 
 
 “ Some of them do. There are very few which dis¬ 
 criminate. Most of the newspapers and magazines 
 will publish any advertisement not prohibited by law. 
 The cheaper magazines, which have an enormous circu¬ 
 lation, claim that they refuse many advertisements 
 promising impossible dividends, but the daily papers 
 all over the country take about everything, exercising 
 care only to herd the legitimate banking houses 
 
20 
 
 A FINANCIAL COURTSHIP. 
 
 together and apart from the illegitimate, leaving the 
 latter in a limbo by themselves. If you were to 
 remonstrate with the papers and magazines for taking 
 such advertisements, they would tell you that they do 
 not have time to examine into the merits of every 
 scheme which is brought to them, and that they are 
 not in business for their health.” 
 
 “Some of these attractive advertisements are by 
 banks,” exclaimed Hannah. “ Surely a bank ought to 
 be honest and safe.” 
 
 “ Yes, and that is why so many people are misled. 
 That word 4 bank 9 is worked to death and made to 
 cover all sorts of things. There are banks and banks. 
 Any one can hang out a sign — bank — but it is not 
 necessarily a legitimate bank, what you would under¬ 
 stand as a bank. Ignorant people, and our newly 
 arrived immigrants, especially, are misled by this use 
 of the word bank. Such people have no way of dis¬ 
 criminating ; to them a bank is a bank, and I suppose 
 they think they are all under government control, as 
 they are in some foreign countries. In running 
 through the popular magazines I find many banks 
 advertising high rates of interest. Such institutions 
 should be carefully avoided. Sound and honestly 
 managed banking institutions do not need to advertise 
 high rates, in fact, do not pay high rates; and the ones 
 
A FINANCIAL COURTSHIP. 
 
 21 
 
 which appear in the advertising columns are probably 
 organized for the benefit of the promoters and not for 
 the depositors. You may scan the papers in vain for an 
 advertisement of our old and well-established savings 
 banks. There are some good trust companies that 
 advertise, but they do not offer fancy rates of interest. 
 
 66 1 am not surprised that very intelligent people are 
 frequently caught by these advertisements. They are 
 shrewdly and speciously drawn and are most seductive 
 to people with small incomes. Many people are drawn 
 into these schemes because they are ashamed to go to 
 some man who is posted in such matters and ask about 
 their real standing. In their hearts they know that 
 there is something questionable, and they hesitate to 
 expose their credulity. I have in my hand the adver¬ 
 tisement of a company which states that it pays 5 per 
 cent., and one of the attractive features which it holds 
 out is that you can withdraw your money at any time. 
 Now any financier will tell you that it is impossible for 
 a bank to safely invest money and agree to pay 5 per 
 cent, upon it, and, at the same time, allow the 
 depositor to withdraw without notice. The very 
 strongest trust companies only allow 2 to 3 per cert, 
 on such deposits. 
 
 46 Another advertisement which I have here offers 
 a 6 per cent, bond upon real estate. Such an adver- 
 
22 
 
 A FINANCIAL COURTSHIP. 
 
 tisement should put one upon his inquiry, for the 
 reason that you can get all the money you want in 
 nearly every well-populated section of this country at 
 5 per cent., and in many sections of the country at 
 even lower rates. You must remember that if these 
 companies advertise to pay 6 per cent., they must be 
 earning a great deal more than 6 per cent., in order to 
 pay their expenses and make a profit for themselves. 
 Therefore, they must be charging the borrower over 
 7 per cent, for the use of the money. This clearly 
 indicates a dangerous and speculative investment. 
 
 “ I do not wish to give the impression that because 
 a bank or a company advertises it is necessarily 
 unsound; I merely wish to state that very few good 
 banks do advertise, and that the ones which advertise 
 high rates are the ones to be carefully examined before 
 a deposit is made with them.” 
 
 “ I have been very much attracted,” said Mary, “ by 
 the advertisements of the wireless telegraph. I don’t 
 see why that shouldn’t prove a great invention and be 
 very profitable.” 
 
 “So it may,” said Mr. Stanley; “but it is yet 
 largely in the experimental stage. It has not been 
 reduced to a business basis. The original promoters 
 of great enterprises and the first stockholders rarely 
 make money. Once in a great while they are enor- 
 
A FINANCIAL COURTSHIP. 
 
 23 
 
 mously successful, as in the case of the telephone, but, 
 as a rule, two or three sets of stockholders have to be 
 wiped out before a great invention is placed upon a 
 sound commercial basis. I should say that the stock 
 of new inventions or industrial enterprises would not 
 be classed as a safe investment for women. I am free 
 to admit that the wireless telegraph is fascinating and 
 attractive. There is a certain romantic interest in 
 having your money in such a weird and uncanny thing 
 as the wireless. 
 
 “1 am very anxious that you should not misunder¬ 
 stand my general remarks on advertising. I am only 
 trying to lay down some general principles for your 
 guidance. I do not wish you to think that the mere 
 fact that a bank or trust company or a corporation 
 advertises lays it open to suspicion, for I am a great 
 believer in advertising, and the papers contain many 
 perfectly legitimate advertisements. Nearly every 
 reputable bond house in the country advertises its 
 bonds. They do not, however, offer 6, 7, 8 and 10 
 per cent, returns on the money. The thing to look 
 out for is the company or bank advertising excessive 
 and improbable rates. A bank which offers 4 per 
 cent, interest is well within the lines of safety; but 
 one which offers 5 per cent, and over should be inves¬ 
 tigated. A little practice will enable you to differen- 
 
24 
 
 A FINANCIAL COURTSHIP. 
 
 tiate very readily between a sound and an unsound 
 company. Any financier could go through a news¬ 
 paper or a magazine and blue pencil the unsound adver¬ 
 tisements as fast as he could run his eye over them.” 
 
 46 1 know a man who made $100,000 in one month 
 in mining stocks,” said Hannah, somewhat irrelevantly. 
 
 “Yes, there are many such instances, and I have 
 heard of men making money at Monte Carlo and on 
 horse racing; but that is not investment — that is 
 gambling, and it is not a proper business for women. 
 Mining, as mining, is a perfectly legitimate business* 
 and, properly conducted by a man who understands it, 
 is sometimes very profitable. The same may be said 
 of the oil business, but women situated as you are 
 cannot possibly know anything about mining or the oil 
 business or have any means of investigating it. Such 
 stocks are so speculative, so dangerous, so uncertain, 
 that no man who is square and honest would think for 
 a moment of investing trust funds in them. A really 
 first grade mine, or oil well, is seized by men on the 
 spot, and does not have to advertise to find a pur¬ 
 chaser. The country is full of shrewd men with an 
 abundance of money, perfectly familiar with mining 
 and kindred ventures, who are ready to take up every 
 good mine or oil well that appears. I am not prepared 
 to say that good mines and good wells are not some- 
 
A FINANCIAL COURTSHIP. 
 
 25 
 
 times sold by advertisement, but it is a rare occur¬ 
 rence. There is but one road for the trustee who 
 handles the funds of women and children, and that is 
 the road of absolute safety. Mines and oil wells do 
 not lie along that road. 
 
 ‘‘There is one thing that many newspapers and 
 some magazines do, which it seems to me is very rep¬ 
 rehensible and very dangerous, and of course exceed¬ 
 ingly misleading, and that is the publication as reading 
 matter of paid advertisements. It is utterly impos¬ 
 sible for those who are not familiar with newspapers to 
 recognize the difference between this reading matter, 
 which is a paid-for advertisement, and bona fide news 
 matter. In fact, the whole intent of it is to deceive. 
 The practiced advertiser or newspaper man can detect 
 this kind of an advertisement, but a woman never 
 would know the difference, and she would get the 
 impression that what she was reading was the opinion 
 of the paper itself or of its correspondent. This is a 
 matter which ought to be regulated by law in some 
 way. No reputable newspaper or magazine ought to 
 countenance such advertising. 
 
 ‘ ‘ Most of the big metropolitan newspapers indicate 
 paid reading notices by stars or by the word ‘ adv.’ at 
 the end of the article paid for. But, outside of these 
 big metropolitan papers, most journals have a price 
 
26 
 
 A FINANCIAL COURTSHIP. 
 
 for pure reading matter, which they do not distinguish 
 in any way, and, even when the three stars or the 
 word 6 adv.’ is used, the ordinary reader does not at 
 once understand the meaning of these printer’s marks.” 
 
 For an hour more the two sisters plied him with 
 questions, which he answered clearly and simply; and 
 then he took his departure, promising to come again 
 the next Tuesday evening. After he had gone, it 
 took two hours more for those he left behind to get 
 sufficiently calmed down and talked out to go to bed. 
 They decided that it had been a very instructive and 
 delightful visit. 
 
A FINANCIAL COURTSHIP. 
 
 27 
 
 CHAPTER n. 
 
 On the following Tuesday Stanley arrived promptly, 
 bringing with him a bouquet of handsome American 
 Beauties. After a brief review of what he had gone 
 over before, in order to see that they had it clearly 
 in mind, he said : 
 
 “ I am going to take up with you this evening the 
 possibilities in the way of good investments. We will 
 go through the entire list first, and then look them 
 over in detail. Here they are : 
 
 “You may invest your money in government bonds. 
 
 “ You may invest it in land or real estate ; and by 
 real estate I include houses, blocks, etc. 
 
 “You may invest it in mortgages on real estate. 
 
 “ You may invest it in municipal bonds. 
 
 “You may invest it in railway bonds. 
 
 “You may invest it in public service corporation 
 bonds. 
 
 “You may invest it in stocks. 
 
 “ You may invest it in bank stocks. 
 
 “ This covers pretty well the list of possible invest¬ 
 ments. Now, to describe more clearly these various 
 
28 
 
 A FINANCIAL COURTSHIP. 
 
 forms of investments I must at the start make clear 
 to you the meaning of the names of those different 
 things. 
 
 “WHAT IS A MORTGAGE? 
 
 “If you owned a piece of land or a house, — say 
 this house we are in, — and you needed a sum of money, 
 you could go to a savings bank and they would lend 
 you a certain sum upon it, — taking what is called a 
 mortgage upon the house and lot, to secure themselves 
 against loss. The way they would go about it is as 
 follows: 
 
 6 ‘ They would first visit the property and make up 
 their minds what it is worth, or what it would bring if 
 they had to sell it to get their money back. Let us 
 say that they valued it at $5,000. They would prob¬ 
 ably tell you that they would loan you 60 per cent, 
 of its value, or $3,000. You see they keep well 
 within the lines of safety, and leave a good margin of 
 40 per cent, of the supposed value to take care of any 
 possible shrinkage or change in values. Having agreed 
 on the sum, they would draw up a note, or promise to 
 pay, at a certain stated time (one, two or five years, 
 according to your wishes), providing in the note that 
 you should pay the bank every six months a stated 
 sum as interest. 
 
A FINANCIAL COURTSHIP. 
 
 29 
 
 6 6 Then they would draw up a formidable legal docu¬ 
 ment known as a mortgage, by which you really trans¬ 
 fer your property to the bank, for when you have once 
 signed it, you can’t sell your property, nor give it 
 away, except subject to the mortgage. Now what 
 happens? The bank hands over to you $3,000 in 
 money, or a check for it. Time goes on and every 
 six months you must go to the bank and pay them $75 
 (I am supposing the rate of interest to have been 
 agreed upon as 5 per cent.), which is what the bank 
 gets for the use of its money. At the end of five 
 years, or for whatever time the money was loaned to 
 you, you must go to the bank and pay them back the 
 $3,000. When you do this the bank will execute 
 what is known as a release of the mortgage (in other 
 words, cancel it), and hand it back to you, together 
 with your note duly canceled. The bank has its 
 money back and you have your house free and clear of 
 all encumbrance. During this period, however, you 
 will have paid the bank the sum of $750 for the use of 
 the money. The dictionary describes a mortgage as 
 ‘ a grant (of land, houses or other immovable 
 property) as security for money lent or contracted to 
 be paid, or other obligation, on condition that if the 
 obligation be discharged according to the contract, the 
 grant shall be void, otherwise it shall remain in full 
 
30 
 
 A FINANCIAL COURTSHIP. 
 
 force,’ but I have tried to make it clearer by an object 
 lesson.” 
 
 44 But what is to prevent one from going to another 
 bank and getting another mortgage and more money?” 
 asked Mary. 
 
 4 4 1 should have explained that when the bank made 
 the mortgage, they at once took it to the county 
 recorder’s office and had it recorded; and this effec¬ 
 tually prevents another first mortgage on the same 
 property. 
 
 44 WHAT IS A BOND? 
 
 44 A bond is a promise to pay. It may be issued by 
 a town, city, county, state or the government, in 
 which case the faith and credit of the municipality* 
 state or government is pledged for the payment; or 
 it may be issued by a corporation, like a railroad, 
 an electric light company or a mill, in which case 
 it is generally secured by a mortgage, but not neces¬ 
 sarily so, for there are debenture bonds which fre¬ 
 quently have no specific security behind them on which 
 you can levy. It is usually a promise to pay a sum 
 of money (say $1,000) at a certain stated time, with 
 an agreement to pay the interest every six months. 
 For convenience there are attached to the bond little 
 oblong notes, or promises to pay, for the amount of 
 each six months’ interest, so that all you have to do 
 
A FINANCIAL COURTSHIP. 
 
 31 
 
 when the six months rolls around is to cut off one of 
 these little so-called coupons and present it to your 
 bank, which will collect it for you. 
 
 “WHAT ARE REGISTERED BONDS? 
 
 “The bonds we have been describing are what are 
 known as coupon bonds. But there is a form known 
 as registered bonds. Coupon and registered bonds 
 differ in two ways. 
 
 “The coupon bond is negotiable, that is, you can 
 transfer it to another person simply by handing it to 
 him, and his title is perfect, and he can collect the 
 principal and interest as well as you can. 
 
 “ The registered bond is worth nothing to any one 
 but the person to whom it is issued, for the name of 
 the person is entered in a register with the number of 
 the bond (for each bond is numbered) and the name 
 is also written in the face of the bond, so that no one 
 else can collect it. Instead of there being coupons for 
 you to cut off, the treasurer of the town or company 
 issuing has to send you a check every six months for 
 your interest; as a matter of fact they are not much 
 used by individuals, or at least, coupon bonds are 
 vastly more popular. 
 
 “ A bond is sometimes described as 4 an endorsement 
 under seal,’ and the dictionary says a bond 4 is a certifi- 
 
32 
 
 A FINANCIAL COURTSHIP. 
 
 cate of ownership of a specified portion of a capital 
 debt due by a government, a city, a railroad or other 
 corporation to individual holders, and usually bearing 
 a fixed rate of interest.’ These descriptions would not 
 mean much to you, however. 
 
 44 WHAT IS A NOTE? 
 
 4 6 A note is simply a promise to pay a certain sum 
 of money. There are many kinds. For instance : 
 
 “ Single name notes, which are simply the promise 
 to pay of one person, or a corporation. 
 
 “Notes with endorsements, which are notes of 
 some person or corporation upon which another writes 
 his name as endorser, or promisor to pay if the maker 
 of the note does not. 
 
 “Notes secured by collateral, —that is, the 
 maker of the note deposits with the one loaning the 
 money certain bonds or stocks or other valuable 
 property as security. 
 
 “Notes may be made payable at a specified date, 
 say six months or a year from the date of making, or 
 may be payable at either the pleasure of the lender or 
 borrower, in which case they are called demand loans, 
 or call loans. 
 
 “Notes may have the rate of interest specified (and 
 this is generally the case in time loans), or the rate 
 
A FINANCIAL COUBTSHIP. 
 
 33 
 
 may be governed by the current market rate for 
 money, which is generally the rule in demand loans. 
 Of course, a note may also be secured by a mortgage, 
 as I told you earlier in the evening. 
 
 “WHAT IS STOCK? 
 
 “ In order to tell you what stock is, I must first tell 
 you what a corporation is; for without corporations 
 there would be no stock. Corporations are a crea¬ 
 tion of modern times. They are a means of associ¬ 
 ating a number of people together in some common 
 business or enterprise. Formerly this was done by 
 means of partnerships ; but as business grew and com¬ 
 merce enlarged and spread, it was found that great 
 enterprises were too large for a few people, and to 
 gather vast numbers into a partnership was impracti¬ 
 cable. There was also the dangerous feature that in a 
 partnership every partner was liable for all the debts 
 of the enterprise. To overcome these obstacles cor¬ 
 porations were devised. They are the creation of the 
 state and are subject to its laws. If a few men want 
 to engage in some business (manufacturing, we will 
 say) that requires large capital, they go to the legisla¬ 
 ture and apply for a charter for a corporation, naming 
 the incorporators, or men who ask for the charter, and 
 stating the kind of business they propose to carry on. 
 
34 
 
 A FINANCIAL COURTSHIP. 
 
 Generally they have no trouble and a charter is given 
 them to organize a corporation with a certain amount 
 of capital divided into so many shares (usually of $100 
 each) to do a certain kind of business in a certain 
 state or town. Having this charter, they call together 
 all the men interested and organize a company or a 
 corporation and elect officers, etc. They then vote to 
 issue a certain amount of stock. Let us say, for 
 instance, that the capital stock is to be $100,000. 
 They will vote to issue 1,000 shares of $100 each. 
 They will then take as many shares as they want and 
 offer the rest for sale. If you had a thousand dollars 
 and believed in the enterprise you could buy ten 
 shares, and on the payment of the money they would 
 give you a certificate stating that you were the owner 
 
 of ten shares of the capital stock of the - 
 
 Manufacturing Company. If the company proved to 
 be a success and earned a profit, they would send you 
 once or twice a year a check for your proportion of 
 the net earnings. You see you would be the owner 
 of one one-hundredth of the property. If the stock 
 was all taken and fully paid for, you would be secure 
 from any suits for the debts of the company; and 
 that is one of the advantages of a corporation over a 
 partnership. It is very necessary in buying stock to 
 know whether it is fully paid and non-assessable.” 
 
A FINANCIAL COURTSHIP. 
 
 35 
 
 ‘ ‘ What do you mean by fully paid and non-assess- 
 able? I don’t think I understand that,” said Hannah. 
 
 “Well, take the manufacturing company which I 
 spoke of a few moments since. Under the laws of 
 most states, if all the stock was sold and paid for at 
 $100 per share, the various subscribers would not be 
 liable for any of the debts of the company. If the 
 corporation was not successful and ran into debt, the 
 only recourse the creditors would have would be to 
 take the mill or whatever property the company had. 
 They could not ask you as a stockholder to pay any of 
 the debts. All you would lose would be what you had 
 invested in the stock; but if all the stock had not been 
 sold and paid for, they could sue you individually and 
 make you pay as much of the debt as you had the 
 means. In other words, one of the real purposes of a 
 corporation is defeated and it practically becomes a 
 partnership with individual liability. Is that clear?” 
 
 “I think so.” 
 
 “Furthermore, in some states there is a law which 
 makes every stockholder in a corporation liable for the 
 amount of his stock and as much more. This is 
 known as double liabilitv and, while it is a mighty 
 fine thing for the creditors of a corporation, it be¬ 
 hooves one to examine the affairs of a company he 
 is investing in pretty carefully and also to watch it 
 
36 
 
 A FINANCIAL COURTSHIP. 
 
 continually. Under our National Bank Act the stock 
 in all national banks has a double liability; therefore, 
 if you own stock in a national bank and it fails, the 
 government can call upon you to pay $100 in cash 
 for every $100 you had in stock.” 
 
 “ Good gracious, I shouldn’t think any one would 
 want to own stocks ! ” exclaimed Mary. 
 
 “Perhaps it sounds more dangerous than it is,” said 
 Mr. Stanley, with a smile, “ but I never advise 
 women to buy stocks anyway. There are too many 
 possibilities. 
 
 “Now I think I have given you all you can digest 
 this evening without mental dyspepsia, and I suggest 
 that Miss Mary play that piece of Chopin’s that I see 
 on the piano.” 
 
 With some blushing and hesitation Mary was 
 induced to play; and so the second evening closed to 
 the evident satisfaction of all. 
 
A FINANCIAL COURTSHIP. 
 
 37 
 
 CHAPTER m. 
 
 When Mr. Stanley next called he took up his 
 lessons where he had left off and went on as follows : 
 
 “WHAT IS A DEBENTURE? 
 
 “You will occasionally hear of a debenture, 
 although it is a term used much more abroad than in 
 the United States. It is rather a hard thing to define, 
 as it is used to cover several kinds of securities; but 
 generally it is a simple coupon bond or note, a simple 
 promise to pay, without special security behind it. 
 It is put in the form of a bond and has the rather 
 high-sounding name of debenture to catch the unwary, 
 but you always want to know what it is secured upon. 
 
 ‘ ‘ There are debentures which are secured by mort¬ 
 gages, and also by collateral, but the word is used 
 very broadly and is likely to lead to misapprehension 
 and a poor investment. 
 
 * ‘ I have now pretty well covered the names of the 
 tools financiers work with. There are, of course, 
 many variations, many sub-titles, many offshoots. 
 Having explained briefly the meaning of the terms, we 
 
38 
 
 A FINANCIAL COURTSHIP. 
 
 will try to learn something of the character and value 
 of these securities and investments as investments; 
 and bear in mind that I am talking all the time about 
 investments, permanent places for money for the 
 purpose of getting a steady income, and not specula¬ 
 tion with possible large losses (as well as gains) and 
 long lapses in dividends. 
 
 “GOVERNMENT BONDS. 
 
 “To most people absolute safety is summed up in 
 these two words. Whenever a promoter wants to 
 impress a greenhorn with his goods he says they are 
 as safe as a government bond. That is the last word. 
 In a way he is right, for, if our government bonds are 
 not good our other securities are likely to have a 
 checkered career, but it does not necessarily follow, 
 for the government might have a costly war and run 
 up an enormous debt, which would depreciate its 
 bonds heavily, while state, county and city bonds, 
 etc., might not be affected. You will find the bonds 
 of many foreign countries selling at much less than 
 par, while municipal and corporate debts in those coun¬ 
 tries are at a premium. Personally, I am not a great 
 believer in government bonds as an investment for the 
 small investor. They fluctuate tremendously at times, 
 as, for instance, the bonds of Russia and Japan during 
 
A FINANCIAL COURTSHIP. 
 
 39 
 
 the late war, and our own bonds at the time of the 
 trouble with England about Venezuela in 1895 — our 
 government issues declined from four to ten points. 
 Then, too, you cannot sue a government and are 
 entirely at its mercy. 
 
 ‘ ‘ In the case of this country our government holds 
 a unique position, for our debt is small, our resources 
 great; but it is not altogether the smallness of the 
 debt nor the greatness of our resources that makes 
 our bonds sell at such high prices. It is the fact that 
 our national banking system is largely based on 
 the bonds of the government. That is, if a national 
 bank wants to issue notes or bank bills it has to go 
 into the market and buy government bonds and lodge 
 them with the United States Treasurer as security. 
 This makes a tremendous and fictitious demand for 
 them and forces the price above their normal value. 
 They are really out of the reach of all but the very 
 rich, to whom the question of income is not material. 
 At the present time the various government issues 
 are selling as follows, and you can see how little the 
 income is from them : 
 
 “The 2 per cent, bonds redeemable in 1930 will 
 net, at 103, 1.85 per cent, per annum. 
 
 “The 3 per cent, bonds due in 1918 will net, at 
 102J, 1.80 per cent, per annum. 
 
40 
 
 A FINANCIAL COURTSHIP. 
 
 “ The 4 per cent, bonds due in 1907 will net, at 103£, 
 1.75 per cent, per annum. The 4 per cent, bonds due 
 in 1925 will net, at 130, 2.05 per cent, per annum. 
 
 “You will notice that only one of them will pay 
 you 2 per cent, per annum. Therefore, if you put 
 your whole property into them you would get an 
 income of considerably less than $1,000. 
 
 “One ought to say in favor of government bonds 
 that they can be turned into cash ‘ at the drop of a 
 hat,’ that they can always be used as collateral, and 
 that they are non-taxable. I should say that our 
 government bonds were the luxury of investment, the 
 pate de foie gras of the world of wealth. To the 
 average man (or woman) who lives on his income 
 they are not attractive.” 
 
 “ Mr. Stanley, what is premium?” asked Mary. 
 
 “ That is a term that puzzles many people. I think 
 I explained to you what par value, or face value, is. 
 In stocks the par or face value is usually $100 (though 
 it may be $5 or $10, or any amount established when 
 the corporation is formed). In bonds it is usually 
 $1,000 (sometimes $500 or even $100). Now, the 
 price of bonds and stocks is regulated by the laws of 
 demand and supply, just as sugar, coffee or any other 
 thing of value. The price indicates the demand for, 
 or the scarcity of, or the value in the public mind. If 
 
A FINANCIAL COURTSHIP. 
 
 41 
 
 the bonds are scarce and hard to get and thought well 
 of, the price will advance and they will sell for more 
 than their par value, —that is, a $1,000 bond may sell 
 at $1,020. The $20, or excess above the par value, 
 is called premium (a word derived, it is said, from two 
 Latin words — ‘ primo ’ and ‘ yum-yum ’ — the latter 
 word expressing the satisfaction one feels at having 
 his bonds sell above par).” 
 
 “ You had best be careful how you put any jokes in 
 your lessons,” laughed Hannah. “ We are so ignorant 
 we may take the joke in earnest.” 
 
 ‘ ‘ I have no fear. But, to go on; if, for any 
 reason, the bonds are not popular, or bear too low a 
 rate of interest, or are not in demand, the price may 
 sink below the par or face value; for instance, a 
 $1,000 bond might sell at $980. The $20 loss in this 
 case is called discount. So you see if bonds or stocks 
 sell above their established par value they are said to 
 be selling at a premium ; if below, at a discount.” 
 
 “Is it safe,” asked Hannah, “ to buy a bond that is 
 selling at a discount? ” 
 
 “ I find,” said Mr. Stanley, “ that there is a preva¬ 
 lent feeling amongst women and those who are igno¬ 
 rant of financial affairs that if a bond is selling at a 
 discount, that is, below par, there must be something 
 wrong with it. Now while it is true that the market 
 
42 
 
 A FINANCIAL COURTSHIP. 
 
 price of a security fixes, in a certain way, its value 
 and the estimation which the general public put upon 
 it, it is frequently true that the market price is not a 
 sure criterion as to its value. As I have said in some 
 previous part of my talk, it is largely a question of 
 supply and demand. It is frequently the case that 
 bonds are brought out and offered to the public in 
 large amounts running up into the millions. Now it 
 takes some time to distribute such an issue of bonds as 
 that and get it into the hands of the final holders, who 
 are the investors. The first purchasers are generally 
 bond houses or brokers, who act as middlemen and 
 distributers and gradually sell the issue to investors. 
 During this period of distribution there are necessarily 
 a great many of the bonds on the market, offered by 
 various houses and people, and this has a tendency to 
 keep the price of the bonds down, so that a very good 
 bond may sometimes sell at quite a discount. After 
 the bonds have become distributed and taken off the 
 market they generally begin to rise, gradually approach 
 par and may go to a considerable premium. It is 
 rather unusual for a new issue to sell at a premium 
 unless it is some very high-grade, well-known bond. 
 
 ‘ * Another factor which governs the price is the rate 
 of interest which the bond bears. A corporation 
 naturally wishes to place its loans, particularly if they 
 
A FINANCIAL COURTSHIP. 
 
 43 
 
 are to run a long term of years, at as low a rate as 
 possible, and instead of selling a 5 per cent, bond at 
 par, they will very often offer a 4 per cent, bond at a 
 discount, preferring to pay the discount in order to 
 get a 4 per cent, rate of interest for a long period of 
 years rather than to place the loan at par and pay 5 
 per cent, for a long period of years. 
 
 “It is quite often the case that a new issue of 
 bonds, even bearing as high a rate of interest as 5 per 
 cent., will sell at a discount when first brought out 
 because the security is not well known. A great 
 many issues of very good 5 per cent, bonds are being 
 offered nowadays on water power companies, inter- 
 urban railways, electric light plants and other public 
 service corporations, and many of these issues are 
 brought out at from 95 to 98. This price appears 
 very low for a sound 5 per cent, bond, and of course 
 each case must be carefully investigated, but it does 
 not necessarily argue that the investment is unsound 
 because it is sold at less than par. In course of time 
 as the bonds are distributed and become better known 
 the price generally advances to par and even higher. 
 
 “ REAL ESTATE. 
 
 “You often hear people say that there is nothing 
 safer than a piece of good real estate,—it can’t run 
 
44 
 
 A FINANCIAL COURTSHIP. 
 
 away. That is a fallacy. It is true and untrue. As 
 a matter of fact, there is nothing more uncertain, more 
 changeable, more tricky than real estate. It takes 
 a very wise and far-seeing man to invest in it judi¬ 
 ciously. While it cannot run away its value can, and 
 frequently does. 
 
 64 Enormous fortunes have been made in real estate* 
 are being made every day, — see the Astor fortune, 
 for example, — but the first Astor happened to get 
 right in the way of a great city and was made rich in 
 spite of himself. You hear of those great fortunes* 
 but you don’t hear of the thousands who bought in the 
 wrong place or wrong direction. I don’t mean to 
 decry real estate as an investment, for I believe in it, 
 but it takes a mighty astute man to figure out the lines 
 of growth in this ever-changing country. 
 
 “Fifty or seventy-five years ago you would have 
 said nothing could be safer than a good New England 
 farm, at which time land was selling at from $25 to 
 $100 an acre. To-day you can buy all you want at 
 from $5 to $20. Thirty or forty years ago there were 
 certain streets in staid old Boston with great brown- 
 stone houses, imposing and dignified, worth from 
 $50,000 to $100,000 each, and one would have said 
 they were the best of security. What could change 
 that splendid locality? Presto ! it became the fashion 
 
A FINANCIAL COURTSHIP. 
 
 45 
 
 to live on the Back Bay. Those splendid homes are 
 to-day cheap boarding houses with Chinese laundries 
 in the basements. What would they bring? $15,000? 
 $20,000 ? Perhaps. 
 
 4 ‘ Real estate is as capricious as a young girl in her 
 first season. A change of fashion, a new street car 
 line, an elevated road, a hundred things absolutely 
 unforeseen, and the value goes up or down 50 per 
 cent, in a night. Take, for instance, nearly every 
 large city except New York, where the conditions are 
 exceptional on account of the fact that the city is built 
 on an island, and watch the effect of the great ten, 
 fifteen and twenty-story buildings now going up on 
 the old four and five-story buildings looked upon 
 with pride as evidence of wealth and prosperity a few 
 years ago. Some one will say, ‘Yes, but think of how 
 many have made fortunes by unexpected rises in value 
 of real estate!’ True, but what I am trying to make 
 clear is that there is a tremendous element of luck to 
 be considered in real estate investments and that the 
 ordinary investor hasn’t the skill nor experience to 
 deal in it. If you can get a man of skill and ripe 
 judgment, who has watched the ebb and flow of traffic 
 and is not influenced by his own investments, you may 
 do well, but my advice to the beginner is to let it 
 alone or go slowly. 
 
46 
 
 A FINANCIAL COURTSHIP. 
 
 “MORTGAGES. 
 
 “A mortgage, if properly made, is generally a safe 
 investment, but many of the difficulties which surround 
 investment in real estate also spring up when you try 
 to buy a mortgage. It requires careful study and 
 delicate weighing of the probabilities. This is par¬ 
 ticularly so in the case of small mortgages which must 
 of necessity be placed on residence or outlying prop¬ 
 erty. Of course a mortgage on inside business prop¬ 
 erty at not over 60 per cent, of its supposed value 
 rarely goes wrong. These mortgages are generally 
 in sums of $25,000 and upward, and are out of the 
 reach of people like yourselves. If you wanted to 
 buy a mortgage you would go to some real estate 
 dealer or person who places mortgages and he would 
 show you a list, some on dwellings, some on board¬ 
 ing houses, some on apartments, some on unoccupied 
 land, etc. 
 
 4 ‘ To begin with, you would want to cut out the 
 loans on unoccupied land unless the margin of security 
 was very large. There is no income from such prop¬ 
 erty and in case you have to foreclose the mortgage 
 and take the property you get no income and have to 
 pay heavy taxes. Small stores in the suburbs are 
 more or less dangerous, as they frequently are unsuc- 
 
A FINANCIAL COURTSHIP. 
 
 47 
 
 cessful. Apartments are fickle and they may become 
 very unpopular if they happen to get in a few unde¬ 
 sirable tenants. The most desirable small loan is to 
 some respectable man on his own home. The only 
 trouble is that such loans are hard to get and generally 
 go to the savings banks at comparatively low rates. 
 The banks are always on the lookout for such loans. 
 Many of the loans on the market are on apartment 
 houses and single houses cheaply built by speculators 
 to sell land. Be careful of them. Also beware of loans 
 on mills or manufacturing plants. They are all right so 
 long as the business is profitable, but if failure comes 
 or they are swallowed up by a trust the security is 
 bad. A mill out of commission brings but a fraction 
 of its cost as a rule. Never lend on personal property 
 or stocks of goods, for you cannot watch your security. 
 It sometimes takes wings. As a rule, never lend to 
 friends. They too often expect to pay only in friend¬ 
 ship, and when they become your debtors they cease 
 to be even friends. 
 
 ‘ ‘ In taking a mortgage two things are to be studied 
 carefully, —the moral risk and the value of the security. 
 By the moral risk I mean the character of the bor¬ 
 rower, for even if the security proves poor, and yet 
 the borrower is a man of character, he will work his 
 fingers to the bone to pay you.” 
 
48 
 
 A FINANCIAL COURTSHIP. 
 
 ‘‘One of my friends,” said Hannah, “told me she 
 had placed some money in the West on a farm 
 mortgage at 7 per cent. Are those safe?” 
 
 “Why, a mortgage in the West is just like a 
 mortgage in the East, or anywhere else. It depends 
 upon the property mortgaged and the local conditions. 
 If you can go and examine the property yourself, or 
 can send some one who knows his business, it is safe 
 enough, but each case must be settled by itself and 
 stand on its own bottom. You can’t say as a general 
 thing western mortgages are good any more than you 
 can say eastern mortgages are good. I should want 
 to know a lot about a man’s character and ability and 
 knowledge before I allowed him to place money on 
 mortgages for me where I could not see the property. 
 Twenty years ago there was a perfect craze in the 
 East for buying western farm and town mortgages. 
 Hundreds of millions were loaned on them at very 
 high rates; the loans were in many cases carelessly 
 made, and there was widespread trouble and much 
 loss. Since then the West has grown rich and has 
 money to loan. You can’t loan money in the good 
 sections of the West at much higher rates than you 
 get here,—that is, the prevailing rate here is 5 per 
 cent; in the West it is 6, but after you have paid 
 your agent and your expenses of examination, etc., 
 
A FINANCIAL COURTSHIP. 
 
 49 
 
 you can’t net more than 5 per cent. At whatever rate 
 a western mortgage is offered here, remember that the 
 western agent is charging the farmer at least 1 per 
 cent, more for his profit. So, if you are offered a 
 western mortgage to pay you 6 per cent., you may be 
 sure the farmer himself is paying 7 or 8 per cent. 
 Now, if the farmer has good security he does not 
 have to pay such rates in the West to-day. They 
 have too much money there ready to be loaned at 
 more reasonable rates. To sum it up, the same rules 
 apply to western mortgages as to eastern,—reasonable 
 rates of interest and a personal examination of the 
 property. 
 
 “MUNICIPAL BONDS. 
 
 4 4 In order to make myself clear I must first define 
 the word 4 municipal,’ for I don’t suppose you have a 
 very clear idea of it, have you?” 
 
 The sisters reluctantly confessed that they thought 
 it had something to do with a city, but were not quite 
 sure. 
 
 “For convenience and for local self-government 
 the state is subdivided into counties, cities, towns and 
 schoul districts. There are also what is known as 
 water precincts, fire precincts, park districts, etc. As 
 a rule, school districts, precincts, etc., are subdivisions 
 of a city or a town, though in some states each county 
 
50 
 
 A FINANCIAL COURTSHIP. 
 
 is divided into several school districts. These various 
 subdivisions of the state are created by the state and 
 get their charters from the legislature. They are, 
 therefore, purely arbitrary creations of the state and 
 are known generally as municipalities. A municipal 
 bond, therefore, is a bond issued by a municipality, 
 that is, a county, city, town, precinct or district.” 
 
 “ But,” said Hannah, “ why do towns have to issue 
 bonds? I thought they raised their money by taxes. 
 What do we pay taxes for? ” 
 
 64 Well,” replied Mr. Stanley, 44 they do raise a 
 great deal of it that way, but sometimes, for unusual 
 expenditures, they borrow the money by issuing bonds 
 payable at some future date. For instance, you 
 remember that this town put in a system of water 
 works last summer. The cost of it was $150,000. 
 Now, if they had raised the whole of that sum this 
 year by levying a tax for the entire amount it would 
 have nearly bankrupted the whole town. Your share 
 of it would have made a large hole in your income. 
 Instead of that, the town issued a bond or its promise 
 to pay, bearing interest at 4 per cent, per annum. 
 These bonds become due in instalments of $15,000 a 
 year for ten years. That is, each year for the next 
 ten years the town will levy a tax amounting to 
 enough money to pay the annual interest on the loan 
 
A FINANCIAL COURTSHIP. 
 
 51 
 
 at 4 per cent, and the $15,000 instalment. At the end 
 of ten years the debt will all be paid and the town will 
 own the water works free and clear. 
 
 “ Sometimes towns adopt the policy of letting the 
 next generation pay a share of the civic improvements, 
 and make the bonds payable thirty, forty or fifty years 
 hence; but the best practice is to pay them inside of 
 twenty years.” 
 
 “How do they go to work to issue bonds?” ven¬ 
 tured Mary timidly. 
 
 “Why, you know a town in New England is run 
 by a set of three men known as selectmen. If it is 
 decided to issue bonds, these men will put a paragraph 
 in the call for the annual town meeting, stating that 
 one of the things to be considered is the question of 
 issuing $150,000 of bonds to build water works. 
 When the town meeting occurs, some one will intro¬ 
 duce a resolution that the town bond itself in the sum 
 of $150,000 to build water works, specifying the rate 
 of interest the bonds are to bear, the length of time 
 they are to run, and how they are to be sold. After 
 more or less discussion the resolution is adopted, and 
 then the selectmen go to work and get the bonds 
 printed or lithographed, and publish a notice in the 
 papers that on such a day, at such an hour, they will 
 receive bids for the bonds. The dealers in bonds see- 
 
52 
 
 A FINANCIAL COURTSHIP. 
 
 ing this notice send in their sealed bids. They are 
 opened and the bonds awarded to the highest bidder. 
 Then the dealer who gets the bonds sells them to 
 people like you or to the savings banks, adding some¬ 
 thing to the price he paid for them for his profit. 
 After the bonds are issued, the town has to levy a tax 
 each year sufficient in amount to pay the interest on 
 the whole amount, and to provide for the part of the 
 principal sum which becomes due. In this way the 
 bonds are gradually called in and retired. Of course, 
 it would be cheaper for the town to levy a tax to pay 
 the whole amount in one year, but the people would 
 not submit to it. 
 
 4 6 Now, there are all kinds of municipal bonds and 
 there is quite a difference in their value. There are 
 
 WATER BONDS, SCHOOL BONDS, COURT HOUSE BONDS, 
 FUNDING BONDS, CITY HALL BONDS and SEWER BONDS, 
 the purposes of which are all sufficiently indicated by 
 their names. These bonds are all for good purposes 
 and the credit of the whole town is usually pledged for 
 their payment; but there are certain classes of bonds 
 which do not stand as well, and which I advise you to 
 let alone. There are what are known as special 
 assessment bonds; that is, instead of being paid 
 directly by a tax on all property in the town, they are 
 paid by a tax on a special part of the town. For 
 
A FINANCIAL COURTSHIP. 
 
 53 
 
 instance, if you wanted to have the road in front of 
 your place macadamized, you might get the town to do 
 it, but they would issue bonds payable by a tax against 
 the abutting property. Thus, only the people directly 
 benefited or the people whose property fronted on the 
 road would be taxed. You can readily see that the 
 security is not as good, and, as a matter of fact, 
 the people so taxed frequently rebel. Lawsuits follow, 
 and the payment of the bond is involved. It is a safe 
 rule never to buy a special assessment bond. Always 
 inquire whether the property of the whole town is 
 pledged. 
 
 64 Another class to be avoided is bonus bonds, which 
 I am glad to say are not very common. To illustrate : 
 It sometimes happens that a town wants to induce 
 some manufacturing concern to locate within its 
 borders. The manufacturing company says it will 
 come if the town will supply a mill. The town goes to 
 work and issues bonds for the purpose. These bonds 
 are nearly always declared illegal if they get into 
 the courts. Another unsafe bond is what is known 
 as a railroad aid bond, which is very similar to a 
 bonus bond. We will suppose it is proposed to run 
 a railroad somewhere near the town. The promoters 
 say to the officers of the town, 6 We will come through 
 your place if you will give us a certain sum of money/ 
 
54 
 
 A FINANCIAL COURTSHIP. 
 
 To raise this sum the town issues bonds and gives the 
 proceeds to the promoters. There have been many 
 cases where the road was never built, and the people, 
 feeling defrauded, repudiated the bonds. 
 
 “I heard a good story once about an issue of rail¬ 
 road aid bonds in a western territory. 
 
 4 6 A certain county voted to issue a block of railroad 
 aid bonds in order to get a railroad built through the 
 county. These bonds were going to be given to the 
 contractor, one half of the issue when the road was 
 half completed, and the other half when the whole 
 road was done. The contractor completed the first 
 half of the road, and then called upon the county com¬ 
 missioners to go over it and inspect it, which they did. 
 They then delivered him half the issue of bonds. The 
 contractor then quietly pulled up all the rails on the 
 first half of the road, laid them down on the last half 
 of the road, and then took the commissioners over the 
 last half of the road, and got the rest of the bonds. 
 It is quite probable the commissioners were in collu¬ 
 sion with the contractor. In any event, the people of 
 the county later on discovered the fraud, and threat¬ 
 ened to repudiate the bonds. The contractor said if 
 they repudiated the bonds he would pull up the track. 
 The county did repudiate the bonds, and the con¬ 
 tractor pulled up the tracks and ties, took them to 
 California, and built another road with them. 
 
A FINANCIAL COURTSHIP. 
 
 55 
 
 “Years afterwards the territory, in order to clear 
 up the financial situation of some of the counties and 
 cities, made a large issue of bonds to refund the 
 outstanding debts of the various municipalities. In 
 other words, people holding the county and city bonds 
 were allowed to exchange them for the territorial 
 bonds. The original contractor for the road in ques¬ 
 tion, hearing of this, went to work and bought up 
 these old defaulted bonds at something like ten cents 
 on the dollar, went to the territorial officers, and 
 exchanged them for the territorial bonds, which he 
 afterwards sold at par. 
 
 ‘ ‘ I am informed that this is an actual occurrence 
 and that the story is absolutely true. It seems almost 
 incredible, but it shows what loose methods prevailed 
 in the earlier days. Such a thing would be impossible 
 at this time. Such bonds are rarely issued now, but 
 thirty years ago they were very common in the West 
 and the South, and resulted in large losses. 
 
 ‘ ‘ To sum up : If you are going to buy a municipal 
 bond, see that it is the obligation of the whole munici¬ 
 pality, whether it is a county, city, town, water dis¬ 
 trict, school district, or fire precinct. See that the 
 object for which they are issued is something which 
 will benefit all the people alike and is one in which 
 all are interested,—such purposes as water, schools, 
 
56 
 
 A FINANCIAL COURTSHIP. 
 
 sewers, court house, city hall, parks, cemeteries, etc. 
 A refunding or a funding bond is generally safe, for it 
 refunds a debt which has stood the test of time ; but it 
 is well in buying a refunding bond to ask the purpose 
 of the original issue, to see that it was not a special 
 assessment, bonus or railroad aid bond. 
 
 “A municipal bond may be either coupon or 
 registered; that is, it may be payable to bearer and 
 have coupons attached, which you cut off every six 
 months and collect through your bank, and this is the 
 usual form; or it may be a registered bond made out 
 in the name of the owner and the interest will be sent 
 by the town treasurer every six months by check. 
 Registered bonds are, of course, safer in case of fire or 
 robbery, but are a nuisance if you want to sell them or 
 use them as collateral. With the present abundance of 
 good safe deposit vaults where you can have a perfectly 
 safe place for your securities for $5 or $10 per annum, 
 there is no need of registered bonds. Every one 
 should have a box in a safety vault even for one’s 
 private papers, such as insurance policies, wills, deeds, 
 etc. It is the cheapest kind of insurance and the 
 mental relief is worth the price. Never keep valuable 
 papers or securities in the house. I have known of 
 many cases where people kept thousands of dollars of 
 securities in old teapots, hair-covered trunks, under 
 
A FINANCIAL COURTSHIP. 
 
 57 
 
 carpets and between mattresses. Every now and then 
 a house burns down and all the precious savings go up 
 in smoke.” 
 
 6 ‘Mr. Stanley, I am following you very well, I 
 think, but will you explain to us what would happen if 
 a town refused to pay its bonds when due?” asked 
 Hannah. 
 
 “ Certainly,” replied the lawyer; “ if the town did 
 not pay, or defaulted, as we say, you would employ an 
 attorney and he would apply to the court for a man¬ 
 damus— which is a legal phrase for an order — to 
 compel the selectmen to levy a tax to pay the bonds. 
 The case would come up for trial in due course, and if 
 the court decided your claim was valid it would issue a 
 mandamus (or order) to the selectmen to levy a tax 
 sufficient in amount to pay your bonds and the 
 interest.” 
 
 66 Supposing the selectmen refused to do it?” said 
 Mary timidly. 
 
 “That rarely occurs; but if it did, the selectmen 
 would be guilty of contempt of court, and the judge 
 would have them arrested, fined and sent to jail. No, 
 if you get a mandamus you will get your money. 
 
 “ One great advantage of a municipal bond is that 
 it is practically a first mortgage on all the property 
 in the town, for taxes have to be paid before any- 
 
58 
 
 A FINANCIAL COURTSHIP. 
 
 thing else. They are a lien on the property and 
 a cloud on the title until paid, and the property can 
 be seized and sold if not paid. It does not matter 
 whether the tax was levied after the property was 
 mortgaged, even. They are a prior lien ahead of all 
 other claims.” 
 
 * ‘ I don’t understand what you mean when you speak 
 of net return,” said Hannah. 
 
 ‘ ‘ Many people are at a loss to understand what is 
 meant when you tell them a bond will net so much, or 
 a certain per cent. I will try and explain this. 
 
 “If you buy a 6 per cent. $1,000 bond at par you 
 pay just $1,000 for it, and, of course, your return is 
 $60 per annum, or 6 per cent.; but if you pay a 
 premium for the bond, you are investing more than 
 $1,000, while your income remains still $60. Now, 
 $60 is 6 per cent, of $1,000, but if you should pay, 
 we will say, a premium of 5 per cent., or $1,050 
 for the bond, your $60 would not be 6 per cent, 
 upon $1,050. You have invested more money to 
 get the 6 per cent, than when you pay par for the 
 security. 
 
 “ Now, the question is, at just what rate of interest 
 have you invested your money. To arrive at this, 
 you divide the amount of income which you receive 
 by the amount that you pay for the bond. In this 
 
A FINANCIAL COURTSHIP. 
 
 59 
 
 case you would divide $60 by $1,050 and the result 
 would be: 
 
 $1,050)$60.0000(.0571 + 
 
 52 50 
 
 7 500 
 7 350 
 
 1500 
 
 1050 
 
 450 
 
 or a little less than 5| per cent, per annum. This is 
 the net result of the investment, so that, when any¬ 
 body says the bond will net so much, he means that 
 this is the net return on the money invested. 
 
 “If the bond is sold below par, the problem is 
 figured out in the same way. 
 
 “In actual practice, all financial houses use a set of 
 carefully prepared tables, just as they do for figuring 
 interest, not relying upon the lead pencil or the mathe¬ 
 matics of any clerk. 
 
 “As a matter of fact, the above method of com¬ 
 putation should only be applied to stocks, which do 
 not mature at any specified time, but in the case of 
 bonds, which mature at a certain date, the strictly 
 accurate method of computation is rather complicated; 
 too much so for the average person to figure, and the 
 only safe way is to use tables prepared for that 
 
60 
 
 A FINANCIAL COURTSHIP. 
 
 purpose. The method I have suggested will do 
 roughly, and is accurate as far as stocks are con¬ 
 cerned, but not for bonds maturing at a fixed date. 
 
 “ The question of how long the bond has to run 
 enters into the computation, and, if one has much of 
 this sort of work to do, it is advisable to have a set of 
 these tables (which can be readily procured) at hand, 
 as they tell at a glance just what any bond bearing any 
 rate of interest will net at any given price, if you 
 know the length of time the security has to run. 
 
 “STATE BONDS. 
 
 “ This is a subject I can deal with very briefly, for 
 the best state bonds sell so high they, like govern¬ 
 ment bonds, are out of the reach of most people. If 
 they are issued by a good state with a high standard of 
 honor, they are a very high-class security, and sell at 
 a price to net from 3 to 3 1-2 per cent. During the 
 War of the Rebellion, Massachusetts met all its obli¬ 
 gations in gold, even when gold was selling at a stu¬ 
 pendous premium, while many of the southern states, 
 overwhelmed with debt, repudiated. The great out 
 about a state bond is that, under the constitution, you 
 cannot sue a sovereign state, so that if a state declines 
 to pay, you are powerless. Therefore, if you buy a 
 state bond, choose your state with care. Nearly all 
 
A FINANCIAL COURTSHIP. 
 
 61 
 
 the states, I am happy to say, are now on a sound 
 financial basis, and there is small risk. Still, I prefer 
 a good municipal to either a state or a government 
 bond. 
 
 “ STOCKS. 
 
 “This is a tremendous subject, and can only be 
 treated in a very general way. I have already told 
 you that a certificate of stock simply represents your 
 ownership of such a proportion of the capital stock of 
 a corporation. In case there is a debt upon the com¬ 
 pany, such as bonds, a mortgage, or floating debt 
 (so-called), the stock represents the equity over and 
 above said debt. If the company is successful, your 
 share of the net earnings is sent you at regular periods 
 in the form of checks. 
 
 “Stocks have a great attraction for many people, 
 particularly for women. They see them rise rapidly 
 at times, they hear of great fortunes being made in 
 them, etc. It is true that such fortunes are made, but 
 they are made by the big plungers and speculators and 
 not by the little, inexperienced dabblers. Great fortunes 
 are made and lost, and thousands of little fortunes 
 are swept away annually. If the small investor con¬ 
 fined himself to the high-grade dividend-paying stocks 
 (and did not buy them on a margin), he would not run 
 much risk ; but this is seldom the case. He is attracted 
 
62 
 
 A FINANCIAL COURTSHIP. 
 
 by the promise of big dividends and buys a stock 
 because it looks cheap and a great rise is predicted ; 
 and the gamblers in Wall Street get his little all. If 
 one buys the best stocks, they do not pay a much 
 larger income than conservative bonds, indeed, they 
 sell on somewhat the same basis ; but even these 
 so-called gilt-edged stocks are subject at times to 
 manipulation and rapid changes in price. These 
 changes need not worry the careful holder who has 
 bought and paid for his stock. So long as the divi¬ 
 dends come regularly and the property is kept up it 
 does not matter much. I am referring now to the best 
 railroad stocks, such as Pennsylvania; New York 
 Central; New York, New Haven and Hartford ; Pullman 
 Car Company, and others. 
 
 “ There is still another line of stocks which attract 
 many on account of their large dividends. I refer to 
 the INDUSTRIAL SHARES : SUGAR, STEEL, SMELTING, 
 etc. There are hundreds, but these are the most 
 prominent. The best of them are semi-conservative, 
 but hardly the thing for a woman. 
 
 64 Great fortunes have been made in mining stocks, 
 — gold, silver, copper, lead and iron; but the chances 
 of a woman hitting the right one are as uncertain as 
 of her hitting a bull’s eye with a stone. She had 
 better pass them by. Women are the easy prey for 
 the mining shark with a salted mine to sell. 
 
A FINANCIAL COURTSHIP. 
 
 63 
 
 ‘ ‘ To sum up the stock question : My advice would 
 be either to buy the most expensive, most conservative, 
 best-established stocks, like those named, or let stocks 
 alone. Perhaps the safest course for a woman is to 
 confine herself to bonds and mortgages. She stands 
 less risk of loss, for she is nearer the bottom of things. 
 While she will not share in the great advances, she 
 does not take the risk of the big losses.” 
 
 “How would you rate investments, Mr. Stanley, 
 — in what order?” said Hannah. 
 
 “ About as follows for a woman : 
 
 “ 1st. Municipal Bonds. 
 
 “ 2d. First Mortgage Corporation Bonds. 
 
 “3d. Real Estate Mortgages. 
 
 “ 4th. Government Bonds. 
 
 “ 5th. State Bonds. 
 
 “ 6th. High-grade Stocks. 
 
 “ It requires very little skill or judgment to buy the 
 first, for they may be said to be generally safe. The 
 courts of the country have very carefully guarded the 
 credit of our municipalities, and where they are offered 
 by a reputable bond house, which has made a proper 
 examination, such as most of them make, you are very 
 safe in their purchase. The second (first mortgage 
 corporation bonds) requires more care and a study of 
 
64 
 
 A FINANCIAL COURTSHIP. 
 
 the property mortgaged. They should not be bought 
 of any but first-class houses, and you should know 
 that the property is not over-mortgaged, that the 
 corporation is a sound one, and that its earnings are 
 sufficient to pay its operating expenses, the interest 
 on its bonds, and a fair margin over. The character 
 of the business in which the corporation is engaged is 
 also well worth considering. The third requires the 
 skill and experience of a good real estate man. The 
 fourth requires no skill, simply money. The fifth 
 calls for a study of the present debt and past history 
 of the state. The sixth requires careful study of the 
 corporation, and the advice of an honest broker.” 
 
 In this pleasant and instructive manner the weeks 
 sped by. Two evenings of each week our lawyer- 
 financier was sure to be found at the Allen homestead. 
 The acquaintance ripened into intimacy and then into 
 warm friendship. The lessons continued, interspersed 
 with an occasional examination and music. At last 
 the subject of finance as a reason for calling was 
 exhausted, for the sisters had really mastered the 
 subject, or at least knew enough so that there was no 
 fear of their losing their money. When it became 
 evident that they needed no more training, he began 
 to read to them from his favorite authors. Of course 
 the neighbors shook their heads, looked knowingly at 
 
A FINANCIAL COURTSHIP. 
 
 65 
 
 each other and said, “Well, did you ever?” etc., but 
 Mr. Stanley pursued the even tenor of his way 
 undisturbed. 
 
 One morning in June, Mary came up behind her 
 sister’s chair so that the older girl could not see her 
 face and said: “Hannah, do you remember the day 
 after father died when we were wishing we had some 
 man in the family to whom we could go for advice ? ” 
 
 “ Yes, very well.” 
 
 “We’re going to have one.” 
 
 “Mary, what do you mean?” and Hannah sprang 
 to her feet and looked at her sister. One glance at 
 the glistening eyes and flushed cheeks told the story; 
 she threw her arms around Mary’s neck, and there 
 was sobbing with the little half-articulated cries and 
 kisses that women love. 
 
POSTSCRIPTUM 
 
 When I had finished this little story, some friend 
 who glanced it over said, “ Well, what did they finally 
 put their money into ? ” 
 
 I think this is a fair question, and I will tell you 
 confidentially what they did. The reason I did not 
 include it in the story was because New England 
 women hate to have any one know about their affairs. 
 
 With Mr. Stanley’s advice, they invested their 
 money as follows: 
 
 They placed $2,000 in the local savings banks 
 ($1,000 in each) at 3£ per cent, per annum, in order 
 that they might have a little money at hand in case 
 of urgent need. 
 
 $5,000 was placed on a local mortgage at 5 per cent., 
 upon property well known to all of them. 
 
 $5,000 was placed in City of Chicago, Ill., 4 per 
 cent, bonds at a price to net 3.80 per cent, per annum. 
 
 $5,000 was placed in the 4 per cent, bonds of their 
 town at a price to net 3.65 per cent, per annum. 
 
 $5,000 was placed in the 3J per cent, bonds of the 
 City of New York at par, netting 3J per cent, per 
 
 annum. 
 
POSTSCRIPT UM. 
 
 67 
 
 $5,000 was placed in the 4£ per cent, bonds of a 
 Washington school district at a price to net 4£ per 
 cent, per annum. 
 
 $5,000 was placed in the 4£ per cent, bonds of a 
 Colorado school district at a price to net 4J per 
 cent, per annum. 
 
 $5,000 was placed in the 5 per cent, first mortgage 
 bonds of an electric light and gas company of one of 
 our large western cities, at par, netting 5 per cent, 
 per annum. 
 
 $5,000 was placed in the 5 percent, first mortgage 
 bonds of a strong interurban electric railway at par, 
 netting 5 per cent, per annum. 
 
 $2,000 was placed in the 3 per cent, bonds of the 
 United States government at a price to net 1.90 per 
 cent, per annum. 
 
 $5,000 was placed in the 5 per cent, bonds of the 
 Chicago Junction Railways & Union Stock Yards of 
 Chicago at a price to net 4 per cent, per annum. 
 
 I have listed the whole investment in a little table 
 below, where it will be perhaps more clearly under¬ 
 stood. You will see that the investments are distrib¬ 
 uted over deposits in savings banks, first mortgages on 
 real estate, municipal bonds, school bonds, first mort¬ 
 gage corporation bonds and United States government 
 bonds. The total amount invested was $49,974, leav- 
 
68 
 
 POSTSCRIPTUM. 
 
 ing a small balance of cash in their hands. The total 
 income from the investment per annum was $2,155, or 
 an average of about 4J per cent, upon their principal. 
 Two girls, living quietly at home, ought to be able to 
 save money on this income, and thus add to their 
 principal. The United States government bonds were 
 included in the $50,000 purchase more as a matter of 
 sentiment, for they could have invested their money 
 to pay much better, but the sisters thought, as a matter 
 of patriotism, they would like to have a few of the 
 government bonds. 
 
 Par valine. 
 
 
 Rate. 
 
 Cost. 
 
 Income. 
 
 $2,000 
 
 Deposited in banks, 
 
 34 % 
 
 $2,000 
 
 $70 
 
 5,000 
 
 Mortgage, 
 
 3% 
 
 5,000 
 
 250 
 
 5,000 
 
 City of Chicago, Ill., bonds, 
 
 4% 
 
 5,100 
 
 200 
 
 5,000 
 
 Local bonds, 
 
 4 % 
 
 5,125 
 
 200 
 
 5,000 
 
 City of New York, 
 
 34 % 
 
 5,000 
 
 175 
 
 5,000 
 
 A Washington school district, 
 
 44 % 
 
 5,162 
 
 225 
 
 5,000 
 
 A Colorado school district, 
 
 44 % 
 
 5,137 
 
 225 
 
 5,000 
 
 A western electric light and gas co., 
 
 3% 
 
 5,000 
 
 250 
 
 5,000 
 
 An interurban railway 5% bond, 
 
 5% 
 
 5,000 
 
 250 
 
 2,000 
 
 United States government, 
 
 3% 
 
 2,050 
 
 60 
 
 5,000 
 
 Chic. Junct. Rys. & Union Stock Yds., 
 
 5% 
 
 5,400 
 
 250 
 
 $49,000 
 
 
 
 $49,974 
 
 $2,155 
 
 Average income about 4.25%.