drawn for his satisfaction with the capital stock, earnings, efficiency and finances of competing companies. Figures given must approximate exactness, for the investor once misled, whether intentionally or otherwise, becomes suspicious and shy of the lure. It is necessary therefore to exercise no little ingenuity in conceiving a plan of presentation which shall adhere to facts and yet offer attractive inducement to the most conservative purchasers. An instance of this is the scheme recently formulated by the fiscal agents of the Union Pacific Railroad Company in bringing out the collateral trust bonds of the Oregon Short Line Railroad. Here subscribers are entitled, in addition to the regularly authorized interest of four per cent. upon the bonds, to a participation, in the form of extra dividends, in the earnings of the Northern Securities Company's stock pledged as collateral under the mortgage.

It would seem obvious from the foregoing that the investment banker, who makes it a point to take the public into his confidence, and to elucidate in concise and readily comprehended fashion the intricacies of finance, is decidedly a factor in education. He is doing much to mold public opinion regarding most weighty matters in that he is striving to clarify public understanding. It may be said that all these facts and figures are easily to be gleaned from the financial journals. The answer is that the reliable financial journals reach comparatively few, this being especially true of small investors. Again, financial writers are apt to take for granted a technical investment knowledge that frequently does not exist. The banker, on the other hand, must observe the utmost discretion in this regard. His circulars are usually followed by detailed letters wherein, in the case of certain individual investors, he premises no previous familiarity whatever, on the part of the recipient, with the subject under discussion. In other words, he is a merchant teacher who desires to impart understanding to his customer pupil in the simplest, clearest manner, in order that the latter may speedily arrive at a point of appreciation of the prospective purchase. With

out his realizing it, the investor is given a brief combination course of instruction in economics, physical and general geography, finance, and business method. Both parties are prompted by instincts of self interest. A business proposition has been made, to be accepted, or rejected. In either event the suggestive value of the circular and letter remains to provoke discussion and, perhaps, investigation. A new point of view has been presented arousing new processes of reasoning. The investor begins to consider cause and effect, to comprehend in a different light the mutually introactive forces at play among the infinite ramifications of the industrial scheme. There are hundreds of moderately prosperous small shop-keepers and thrifty farmers and mechanics who yearly amass modest sums applicable to investment. The major portion of these funds has hitherto gone to swell the deposits of savings banks, through lack of local investment opportunity, or because of ignorance of fields yielding richer returns. It is to these people that particular reference is made above.

It is surprising to note the growing astuteness in investment matters. A little questioning will generally elicit the information that this ready conversance with financial topics, this unexpected awareness of proposed or completed consolidation of properties, is largely due to circular letters or pamphlets sent out by banking firms, or to hints dropped by traveling bond salesmen. These latter, by the way, are becoming more and more numerous each year. Nearly every investment firm employs two to three, and sometimes six to eight traveling salesmen, whose duty it is to scour the land in quest of uninvested funds. Their samples consist of descriptive circulars and statistical matter concerning every conceivable enterprise which may be likely to prove of interest. Preferences in securities vary as widely as do tastes in haberdashery. Men are influenced in this respect by their business affinities, which may have brought them in contact with a certain class of corporate undertaking; by the nature of the idle funds under their disposition; by inherited prejudice, and by what other men, of

more pronounced initiative, buy. The bond salesman endeavors to keep his chief in touch with these peculiarities. Local market conditions are pregnant with meaning to him, and may often be turned to good account in the home office, or in adjacent territories. So news of contemplated changes, of combinations, or original methods, is borne along as the wind wafts the seeds. The managing bond man at home learns that X in Ohio wishes sound industrial bonds which will net him a good rate of interest; that Y in Pennsylvania likes gilt-edged railroad bonds, or guaranteed stocks; that Z in Massachusetts, who is ultra conservative, declares for municipal or federal government securities. Letters to accord with the lines suggested are forthwith dictated and

sent.

This brings us to the educational elements involved in the negotiation of the latter class of obligations. The investor who is asked to buy the bonds, or corporate stock, of a municipal corporation, desires to learn a number of things. He may wish to know whether the city, or county, or village has ever defaulted principal or interest; what the population is; its character; the nationalities chiefly represented; what industries thrive therein; the assessed valuation of property and the ratio of the latter to the total net debt; the law regulating bond issues; the financial and governmental methods of the political party in control; and, finally, what statutes, if any, exist whereby he may recover in the event of default.

American bankers have, of late years, placed among their customers many millions of dollars in the obligations of England, of Russia, of Germany, and notably of Mexico. The shrewd investor will no more accept the pledge of a nation with whose financial responsibility he is unacquainted than he will endorse the note of an individual who is unknown to him. Preliminary, then, to the placement of foreign securities are instructive discussions of international questons, of alien finance, of internal governmental policies, of monetary exchange rates; in a word, of general economics.

The investment banker is the intermediary between idle capital and undeveloped enterprise. It is to his profit to bring the two together. Each is becoming daily more dependent upon him. Busy corporation officials have neither time nor opportunity to keep in close and continous touch with the great world of investors. Yet without them corporations could not live. A manufacturing plant is to be enlarged. Lesser companies are to be absorbed by purchase, or by exchange of securities upon a pro rata valuation. Plans await consummation which will insure reduced operating expense accounts, and greater proportionate return upon investment. New cash working capital is wanted. Need of funds is imperative, and the banker stands ready to find them, provided certain conditions are fulfilled. Of growing importance among these conditions. today is frank publicity in statement of account on the part of the corporation seeking assistance. The banker must have data to show his customers, and these data must not be garbled, or glossed over with specious and confusing bookkeeping systems. Hence the banker is educating the public to condemn obscureness in matters of gross and net earnings, operating expenses, balance sheets, and actual conduct of affairs. A notable instance of the realization of the weight and meaning of this outside pressure for an exact accounting has lately been evidenced by the greatest of all private corporations: the United States Steel Corporation. President Schwab has caused to be exhibited statements minute in every particular, and has besides published under affidavit a detailed enumeration of the company's assets and their cash equivalents.

A tendency toward the establishment of business principles upon a sounder basis is here manifest. It rests upon purely selfish and practical foundations, no doubt. Yet at the same time there is evidenced an undercurrent along ethical lines, the potential value of which is not to be underestimated. These most desirable results may be attributed in a very large measure to the educational element inherent in the investment banker's relation to his customers.

EDITORIAL CRUCIBLE

"Whenever you see an extraordinary statement under big headlines, wait until the next day,' says the latest commentator on the newspapers. The same remark applies to individuals. Beware of big heads!"-Boston Herald.

THIS IS CAPITAL as far as it goes. Big heads are as bad as big headlines; but the fact remains that the Herald should either justify its sensational account of the ten industries destroyed by "trusts" in the town of Kearney, Nebraska, or apologize to its readers for publishing such audacious lies.

MR. PLATT should not be reelected as United States senator from New York, because he is not a statesman. He represents no ideas of public policy, and no principle either

party doctrine or public welfare. He is a manipulator of politics and a perverter of the machinery of representation. Neither his ideas, personal influence nor methods are helpful to the republican party or creditable to the United States senate. He is efficient chiefly as a bleeder of corporations, a trader in nominations, and a lobbying manipulator of legislation. He stands for the worst phases of political life and is a discredit to the empire state.

THE PENNSYLVANIA and New York Central railroads have announced their intention of raising the wages ten per cent. of all employees receiving less than $200 a month. This will distribute several millions a year among the employees of the Pennsylvania railroad, and similarly among those of the New York Central. It may be expected that the other great railroads, and for that matter practically all railroads, will soon follow this excellent example.

It is now in order for Mr. Tom L. Johnson, or Mr. Bryan, or Mr. Cleveland, and other prophets of despair, to announce that the poor are growing poorer, and that the laborers are worse off than ever before; that capital is swal