Some of the Insurance Offices grant imme- diate annuities. Of course, in purchasing a life annuity from an Insurance Office, it is necessary to ensure as far as is humanly possible that an annuity will be paid for life. This not only de- pends upon the present solvency of the company, but upon that solvency being maintained. There is not much difficulty, however, in selecting from amongst the numerous well-established companies, with proper advice, one that will answer every requirement. The following table shows the amount of an annuity granted by the undermentioned companies for every £100 paid. The age last birthday is that upon which the pay- ment is based, and the initial letters M. and F. indicate the rates for male and female lives. The ages quoted range from 50 to 70 years, but the terms for purchasing an annuity at any age can be obtained at the Insurance Office.
By a few companies, distinguished thus (!), the proportionate amount of annuity is payable to the day of death.
——————————————————————————————————————————————————- | | | | | | | | | | | | | Office | | Age 50 | Age 52 | Age 55 | Age 58 | Age 60 | Age 62 | Age 65 | Age 70 | | | | | | | | | | | | | | |———————————-|-|————|————|————|————|————|————|————|————|-| | | | £ s. d.| £ s. d.| £ s. d.| £ s. d.| £ s. d.| £ s. d.| £ s. d.| £ s. d.| | | | | | | | | | | | | | |!British Empire Mutual |M| 7 4 6| 7 10 2| 8 0 2| 8 12 10| 9 3 2| 9 14 6|10 14 4|12 16 4|M| | |F| 6 12 0| 6 17 0| 7 6 2| 7 17 4| 8 6 2| 8 16 2| 9 14 4|11 15 10|F| | | | | | | | | | | | | | Caledonian |M| 7 6 2| 7 12 0| 8 2 8| 8 16 0| 9 7 0| 9 19 2|11 0 0|13 5 10|M| | |F| 6 11 8| 6 17 0| 7 6 2| 7 17 11| 8 7 0| 8 15 7| 9 13 10|11 14 11|F| | | | | | | | | | | | | | City of Glasgow |M| 7 5 6| 7 11 6| 8 2 0| 8 15 6| 9 6 6| 9 18 6|10 19 0|13 4 6|M| | |F| 6 12 6| 6 17 6| 7 7 5| 7 17 9| 8 6 7| 8 16 0| 9 14 10|11 14 7|F| | | | | | | | | | | | | | Eagle |M| 7 5 10| 7 11 6| 8 1 10| 8 15 0| 9 5 8| 9 17 6|10 18 0|13 1 4|M| | |F| 6 12 10| 6 18 2| 7 7 6| 7 19 2| 8 8 4| 8 18 8| 9 17 6|12 0 4|F| | | | | | | | | | | | | | Economic |M| 7 5 6| 7 11 6| 8 1 10| 8 15 4| 9 6 4| 9 18 4|10 19 8|13 4 10|M| | |F| 6 12 4| 6 17 8| 7 7 4| 7 19 2| 8 8 4| 8 19 0| 9 18 4|12 2 8|F| | | | | | | | | | | | | | Edinburgh |M| 7 4 6| 7 10 6| 8 1 4| 8 14 10| 9 6 2| 9 18 6|11 0 0|12 19 6|M| | |F| 6 11 2| 6 16 8| 7 6 6| 7 18 6| 8 8 0| 8 18 10| 9 18 6|11 17 8|F| | | | | | | | | | | | | |!English and Scottish |M| 7 10 0| 7 16 8| 8 6 10| 8 19 0| 9 10 2|10 2 8|11 3 2|13 6 4|M| | Law |F| 6 12 4| 6 17 4| 7 7 4| 7 19 4| 8 8 6| 8 18 10| 9 18 4|11 19 0|F| | | | | | | | | | | | | |!Friends' Provident |M| 6 15 4| 7 0 10| 7 10 4| 8 1 8| 8 10 7| 9 0 9| 9 18 10|11 18 6|M| | |F| 6 5 8| 6 10 9| 6 19 11| 7 11 1| 7 19 11| 8 9 11| 9 7 1|11 4 7|F| | | | | | | | | | | | | | General |M| 7 4 8| 7 11 10| 8 3 10| 8 17 4| 9 7 2| 9 18 8|11 2 0|13 8 6|M| | |F| 6 13 4| 6 18 10| 7 9 2| 8 1 2| 8 10 0| 8 19 6| 9 15 8|11 10 10|F| | | | | | | | | | | | | |!Gresham | | 6 18 5| 7 4 0| 7 14 1| 8 6 7| 8 16 8| 9 7 11|10 8 1|12 12 11| | | | | | | | | | | | | | |!Guardian |M| 6 19 4| 7 5 4| 7 15 8| 8 9 0| 8 19 8| 9 11 6|10 1 2|12 15 10|M| | |F| 6 6 6| 6 11 10| 7 1 6| 7 13 2| 8 2 4| 8 12 10| 9 11 8|11 14 8|F| | | | | | | | | | | | | |!Hand-in-Hand |M| 7 3 4| 7 9 4| 8 0 0| 8 13 4| 9 4 2| 9 16 2|10 17 0|13 1 4|M| | |F| 6 10 2| 6 15 8| 7 5 4| 7 17 2| 8 6 6| 8 17 0| 9 16 2|11 19 10|F| | | | | | | | | | | | | | Law Union and Crown |M| 7 2 8| 7 8 4| 7 18 10| 8 12 0| 9 2 8| 9 14 8|10 15 6|13 0 2|M| | |F| 6 9 10| 6 15 2| 7 4 8| 7 15 10| 8 4 10| 8 15 2| 9 14 2|11 17 6|F| | | | | | | | | | | | | |!Legal and General |M| 7 2 0| 7 7 6| 8 18 6| 8 13 8| 9 5 2| 9 17 6|10 17 10| — |M| | |F| 6 7 10| 6 13 0| 7 2 0| 7 13 0| 8 1 10| 8 12 2| 9 6 8| — |F| | | | | | | | | | | | | | Life Association of |M| 7 6 0| 7 12 0| 8 2 8| 8 16 0| 9 7 0| 9 19 2|11 0 6|13 4 8|M| | Scotland |F| 6 12 10| 6 18 2| 7 7 10| 7 19 8| 8 9 0| 8 19 10| 9 19 2|12 2 6|F| | | | | | | | | | | | | | Liverpool and London |M| 7 4 4| 7 10 6| 8 1 4| 8 15 0| 9 6 4| 9 19 0|11 0 10|13 7 8|M| | and Globe |F| 6 10 10| 6 16 6| 7 6 4| 7 18 4| 8 8 0| 8 19 0| 9 19 0|12 4 10|F| | | | | | | | | | | | | | London, Edinburgh, |M| 8 5 0| 8 11 0| 9 1 8| 9 15 4|10 6 8|10 19 2|12 1 2|14 7 10|M| | and Glasgow |F| 7 11 0| 7 16 6| 8 6 2| 8 18 4| 9 8 0| 9 18 10|10 18 8|13 4 10|F| | | | | | | | | | | | | | Marine and General |M| 6 17 3| 7 3 3| 7 13 3| 8 5 0| 8 14 9| 9 7 0|10 10 0|12 12 0|M| | Mutual |F| 6 4 3| 6 9 6| 6 18 9| 7 10 6| 7 19 6| 8 9 6| 9 8 3|11 10 6|F| | | | | | | | | | | | | | National Life |M| 7 11 3| 7 17 3| 8 7 11| 9 1 5| 9 12 7|10 4 10|11 6 5|13 12 3|M| | |F| 6 17 9| 7 3 3| 7 13 0| 8 4 11| 8 14 4| 9 5 2|10 4 9|12 9 10|F| | | | | | | | | | | | | | National Provident |M| 6 15 4| 7 0 10| 7 10 4| 8 1 8| 8 10 6| 9 0 8| 9 18 10|11 18 6|M| | |F| 6 5 8| 6 10 8| 6 19 10| 7 11 0| 7 19 10| 8 9 10| 9 7 0|11 4 6|F| | | | | | | | | | | | | | North British and |M| 7 5 4| 7 11 4| 8 1 10| 8 15 2| 9 6 2| 9 18 2|10 19 4|13 4 6|M| | Mercantile |F| 6 12 2| 6 17 6| 7 7 2| 7 19 0| 8 8 2| 8 18 10| 9 18 2|12 2 6|F| | | | | | | | | | | | | |!Northern |M| 7 1 8| 7 7 0| 7 16 6| 8 8 8| 8 18 6| 9 9 4|10 8 6|12 8 8|M| | |F| 6 9 6| 6 14 4| 7 3 0| 7 13 10| 8 2 2| 8 11 10| 9 9 2|11 9 0|F| | | | | | | | | | | | | |!Pearl |M| 7 9 4| 7 15 8| 8 6 10| 9 0 4| 9 11 0|10 3 2|11 4 6|13 10 6|M| | |F| 7 3 2| 7 9 4| 8 0 2| 8 13 0| 9 3 0| 9 14 6|10 14 6|12 17 6|F| | | | | | | | | | | | | | Positive |M| 7 0 0| 7 8 0| 8 0 0| 8 15 0| 9 5 0| 9 19 0|11 0 0|13 5 0|M| | |F| 6 10 0| 6 16 0| 7 5 0| 8 0 0| 8 10 0| 9 0 0| 9 15 0|11 15 0|F| | | | | | | | | | | | | |!Provident Clerks' |M| 6 15 10| 7 1 6| 7 11 9| 8 4 9| 8 15 1| 9 6 9|10 6 10|12 9 5|M| | |F| 6 3 3| 6 8 7| 6 17 10| 7 9 1| 7 18 1| 8 8 5| 9 7 0|11 8 7|F| | | | | | | | | | | | | | Prudential |M| 6 16 6| 7 2 6| 7 13 6| 8 7 0| 8 18 0| 9 10 6|11 12 0|12 17 0|M| | |F| 6 3 0| 6 9 0| 6 19 0| 7 11 0| 8 0 6| 8 11 0| 9 11 0|11 15 0|F| | | | | | | | | | | | | |!Rock |M| 7 5 0| 7 11 2| 8 2 2| 8 16 2| 9 7 9|10 0 5|11 2 11|13 4 2|M| | |F| 6 11 4| 6 17 0| 7 6 11| 7 19 4| 8 9 0| 9 0 2|10 0 6|12 1 3|F| | | | | | | | | | | | | | Royal |M| 6 12 7| 6 18 11| 7 9 5| 8 1 8| 8 11 2| 9 2 2|10 1 10|12 1 0|M| | |F| 6 5 3| 6 11 0| 7 0 7| 7 11 3| 7 19 6| 8 8 8| 9 5 0|10 17 9|F| | | | | | | | | | | | | | Royal Exchange |M| 6 16 11| 7 2 9| 7 13 0| 8 5 11| 8 16 6| 9 8 1|10 8 5|12 11 3|M| | |F| 6 4 3| 6 9 6| 6 18 11| 7 10 5| 7 19 5| 8 9 8| 9 8 3|11 10 7|F| | | | | | | | | | | | | | Scottish Amicable |M| 7 0 7| 7 6 2| 7 16 5| 8 9 2| 8 19 4| 9 11 1|10 11 10|12 15 7|M| | |F| 6 7 8| 6 13 2| 7 2 8| 7 13 9| 8 2 5| 8 12 9| 9 12 0|11 14 1|F| | | | | | | | | | | | | | Scottish Life |M| 7 7 6| 7 13 6| 8 4 4| 8 17 10| 9 9 0|10 1 2|11 2 8|13 8 6|M| | |F| 6 13 6| 6 19 0| 7 8 8| 8 0 8| 8 10 0| 9 0 8|10 0 0|12 2 6|F| | | | | | | | | | | | | | Scottish Metropolitan |M| 7 10 10| 7 18 0| 8 9 4| 9 2 0| 9 11 8|10 3 6|11 5 8|13 11 11|M| | |F| 6 12 9| 6 17 9| 7 6 8| 7 17 6| 8 6 1| 8 16 3| 9 14 6|11 15 8|F| | | | | | | | | | | | | | Scottish Provident |M| 7 2 8| 7 8 5| 7 18 9| 8 11 11| 9 2 8| 9 14 6|10 15 3|12 16 10|M| | |F| 6 9 8| 6 15 0| 7 4 4| 7 15 11| 8 5 1| 8 15 6| 9 14 5|11 14 3|F| | | | | | | | | | | | | |!Scottish Widows' Fnd. |M| 6 8 0| 6 13 4| 7 2 2| 7 12 10| 8 1 0| 8 10 6| 9 7 10|11 8 6|M| | |F| 6 2 6| 6 7 6| 6 16 0| 7 6 2| 7 14 0| 8 3 2| 8 19 10|10 18 6|F| | | | | | | | | | | | | | Standard |M| 6 19 4| 7 5 0| 7 15 1| 8 7 10| 8 18 5| 9 10 0|10 10 3|12 7 9|M| | |F| 6 9 8| 6 15 0| 7 4 4| 7 16 0| 8 5 1| 8 15 6| 9 14 5|11 7 1|F| | | | | | | | | | | | | | Star |M| 7 3 9| 7 10 6| 8 2 1| 8 15 8| 9 5 5| 9 16 7|10 17 2|13 0 1|M| | |F| 6 14 4| 6 19 11| 7 9 6| 8 0 11| 8 9 11| 9 0 1| 9 18 6|11 15 8|F| | | | | | | | | | | | | | Sun (of India) |M| 7 5 10| 7 12 0| 8 2 10| 8 16 8| 9 8 0|10 0 4|11 2 2|13 8 8|M| | |F| 6 12 6| 6 18 0| 7 7 10| 8 0 0| 8 9 8| 9 0 8|10 0 6|12 6 0|F| | | | | | | | | | | | | | United Kingdom |M| 6 15 0| 7 0 6| 7 10 3| 8 2 6| 8 15 11| 9 3 3|10 0 3|12 1 0|M| | Temperance |F| 6 2 11| 6 8 0| 6 16 11| 7 6 5| 7 16 4| 8 6 0| 9 3 4|11 2 3|F| | | | | | | | | | | | | | Yorkshire |M| 7 1 2| 7 7 6| 7 18 0| 8 10 4| 9 0 0| 9 11 6|10 11 0|12 15 0|M| | |F| 6 8 0| 6 13 6| 7 2 0| 7 12 6| 8 2 6| 8 13 6| 9 12 0|11 12 0|F| | | | | | | | | | | | | |———————————-|-|————|————|————|————|————|————|————|————|-| | Post Office (Govt.) |M| 6 13 4| 6 19 2| 7 9 10| 8 3 2| 8 14 0| 9 6 0|10 6 10|12 10 10|M| | Anns. |F| 6 0 6| 6 6 0| 6 15 8| 7 7 6| 7 16 8| 8 7 4| 9 6 4|11 9 6|F| | | | | | | | | | | | | |———————————-|-|————|————|————|————|————|————|————|————|-| | Equitable, U. States} |M| 7 10 0| 7 15 9| 8 6 2| 8 19 3| 9 9 10|10 1 9|11 1 8|12 17 11|M| | Mutual, New York } |F| 6 16 9| 7 2 1| 7 11 6| 8 3 1| 8 12 1| 9 2 8|10 0 9|11 17 8|F| | New York } | | | | | | | | | | | ——————————————————————————————————————————————————-
These stocks stand as high in the estimation of the public as the British Government Funds. They consist of loans raised in this country for the use of the Indian Government and are two in number, bearing interest respectively at the rate of 3 and 3 1/2 per cent.
There is also what is termed a Rupee Paper Loan, raised in India at 3 1/2 per cent. per annum. The interest is paid in the currency of the coun- try, which is the rupee, and that coin being worth only a little more than half its nominal value in this country, the investor in this stock would receive in the shape of interest little more than half the £3 10s. a year. The price of the stock in the market is consequently in the same proportion, and at the present moment is about £62 for every £100 stock.
THESE are loans raised by boroughs and coun- ties, and other authorities in this country, for local purposes, upon the security of the rates or other assured income. Before the money is borrowed the consent of the Local Government Board is necessary to make the loan legal, and evidence is required that the resources of the borrowers are ample to meet their obligations.
On most of these stocks the rate of interest is 3 per cent., though there are some few at 3 1/2 per cent. The principal is redeemable at fixed dates, or by a sinking fund, that is, by setting aside so much a year to pay off the loan at a fixed time, or as opportunity offers. For instance, in times when money is scarce or dear there is a proba- bility of these stocks falling below their par value, and the Sinking Fund is then used to buy the stock in the market. Thus the Corporation may be able in effect to pay off a loan of £100 for £90 or £95, whatever the price may be, and so gain the amount of the difference.
Investments in securities of this kind may be considered absolutely safe, although certainly there is the contingent risk of a town, after bor- rowing up to its full powers, drifting into decay from the loss of its staple trade, and so finding itself unable to meet its obligations. The in- vestor should, however, find no difficulty in discovering where such a contingency would be possible.
The interest on these loans is usually sent direct to the stock-holders, by means of an order on a bank.
Loans made to the various Colonies of Great Britain have always been a favourite mode of investing money, as they command a better rate of interest, at least they have done so in the past, although the confidence which the Colonies have succeeded in inspiring now enables them to borrow money at a low rate of interest. At the same time the old stocks have advanced to a very considerable premium.
Experience has shown that, so far, the invest- ment has been a safe one, although great fluc- tuations have from time to time taken place in the value of some of the stocks, owing to a check in prosperity, depression of trade, or diminished confidence in the stability of the Colony from various causes. These transient clouds have, however, in time, passed away, and confidence has again been established.
The investor should be able readily to distin- guish between those Colonies which are perma- nently settled and not likely to be seriously affected by any passing crisis, and others in a less fortunate or advanced position. And he would do well, if adversity should at any time overtake a Colony, and so send down the value of its stock, to avoid selling out in a panic, but to consider whether the circumstances are such that the crisis may pass off at no distant date, and confidence be restored. It should be remem- bered that there are always speculators who, at such times, endeavour to intensify a crisis, in order that prices may be forced down, and that they may be thereby enabled to acquire stocks at low prices from timid holders.
There are two modes of investing in these
securities,
1. Inscribed or Registered Stock.
2. Bonds.
In the case of Inscribed or Registered Stock, any amount can be invested, and the same is registered in the books of the Bank of England or elsewhere, in the name of the investor, in the same way as the Government Funds. The divi- dend or interest is sent to the owner's address by an order payable at a bank, half-yearly or quarterly, as the case may be, or it may, on written instructions being sent to the agents, be transmitted to the credit of the account of the holder at his own bankers periodically. This is by far the best plan; it saves trouble and risk, and, for the matter of that, something in postage. It is, moreover, the method much preferred by the agents themselves, and it involves no additional expense.
The following is a list of the Inscribed Stocks of the Colonial Governments, with an example of the way in which the market price, which of course varies almost from day to day, is quoted:-
COLONIAL GOVERNMENT INSCRIBED STOCKS. ————————————————————————————————————————————————————————————————- | | | | | | | | | | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | | | | | | | | | | |—————|—————|————————-|————-|——-|———————————————————————————————————— | £ | £ | | | | | | | | 100,000| 100,000| 1 Mar. 1 Sept.| 4 Aug. | 4 |Antigua 4% Inscribed Stock | 1919-44 | 115 - 117 | | 375,000| 375,000|15 Mar. 15 Sept.| 17 Aug. |3 1/2|Barbados 3 1/2% Inscribed Stock | 1925-42 | 109 - 111 | | 1,120,000| 969,940| 1 Jan. 1 July | 16 Dec. | 3 |British Columbia (Province of) 3% Insc. Stock | 1941 | 101 - 103 | | — | 194,500|15 Jan. 15 July | 16 Dec. | 4 |British Guiana 4% Inscribed | 1935 | 118 - 120 | | 7,505,800| 7,505,800| 1 May 1 Nov. | 19 Oct. | 4 |Canada 4% Stock Registered |1904-4-6-8 | 105 - 111 | | 3,975,614| 3,975,614| 1 Jan. 1 July | 15 Dec. | 4 | Do. 4% Reduced (late 5%) Registered | 1910 | 109 - 111 | | 4,550,300| 4,550,300| 1 June Dec. | 16 Nov. |3 1/2| Do. 3 1/2% Stock Registered | 1909-34 | 107 - 109 | | 3,431,700| 3,431,700| 1 Jan. July | 15 Dec. | 4 | Do. 4% Loan for £4,000,000 | 1910-35 | 110 - 112 | |10,939,834| 9,978,021| " " | " | 3 | Do. 3% Stock Registered | 1938 | 102 - 104 | | 3,000,000| 2,115,152| 1 June 1 Dec. | 16 Nov. | 4 |Cape of Good Hope 4% Stock Registered | 1917-23 | 117 - 119 | | 3,769,465| 3,769,465| " " | " | 4 | Do. (Loan of 1883) Inscribed | 1923 | 119 - 121 | | 9,997,566| 9,997,566|15 Apl. 15 Oct. | 2 Oct. | 4 | Do. 4% Consolidated Stk. Ins. | 1916-36 | 116 - 118 | | — | 5,154,272| 1 Jan. 1 July | 16 Dec. |3 1/2| Do. 3 1/2% Consolidated Ins. Stk.| 1929-49 | 115 - 117 | | 1,076,100| 1,070,100|15 Feb. 15 Aug. | 16 Jan. | 4 |Ceylon 4% Inscribed Stock | 1934 | 123 - 125 | | 1,450,000| 1,450,000| 1 May 1 Nov. | 2 Oct. | 3 | Do. 3% Inscribed Stock | 1940 | 104 - 106 | | 123,670| 123,670|15 May 15 Nov. | 16 Oct. | 4 |Grenada 4% Inscribed Stock | 1917-42 | 115 - 117 | | 341,800| 341,800|15 April 15 Oct. | 16 Sept.|3 1/2|Hong Kong 3 1/2% Inscribed Stock | 1918-43 | 107 - 110 | | — | 1,086,241|16 Feb. 16 Aug. | 16 Jan. | 4 |Jamaica 4% Inscribed Stock | 1934 | 120 - 122 | | 480,749| 480,759| 1 Feb. 1 Aug. | 2 Jan. | 4 |Mauritius 4% Inscribed Stock | 1937 | 121 - 123 | | — | 282,481|15 May 15 Nov. | 16 Oct. | 4 |Natal 4% Consolidated Stock, Inscribed | 1927 | 120 - 122 | | 3,026,444| 3,026,444| 1 April 1 Oct. | 1 Sept.| 4 | Do. do. do. | 1937 | 123 - 125 | | 3,714,917| 3,714,917| 1 June 1 Oct. | 3 Nov. |3 1/2| Do. 3 1/2% Inscribed Stock | 1914-39 |107.5-108.5| | 320,000| 320,000| 1 Jan. 1 July | 16 Dec. | 4 |Newfoundland Inscribed | 1913-38 | 109 - 111 | | 550,000| 550,000| " " | " | 4 | Do. 4% Inscribed Stock | 1935 | 110 - 112 | | 200,000| 200,000| " " | " | 4 | Do. 4% Consolidated Stock Inscribed | 1936 | 110 - 112 |
| 9,686,300| 9,686,300| 1 Jan. 1 July | 2 Dec. | 4 |New South Wales Stock, Inscribed | 1933 | 120 - 122 | |16,500,000|16,500,000| 1 April 1 Oct. | 2 Sept.|3 1/2| Do. 3 1/2% Stock, Inscribed | 1924 | 110 - 111 | | — |12,826,200| 1 Mar. 1 Sept.| 5 Aug. |3 1/2| Do. 3 1/2% Stock, Inscribed | 1918 | 109 - 110 | | 4,000,000| 4,000,000| 1 April 1 Oct. | 2 Sept.| 3 | Do. 3% Inscribed Stock | 1935 |101.5-102.5| |29,150,302|29,150,302| 1 May 1 Nov. | 2 Oct. | 4 |New Zealand 4% Consolidated Stock Inscribed | 1929 | 115 - 116 | | 5,960,588| 5,960,588| 1 Jan. 1 July | 2 Dec. |3 1/2| Do. 3 1/2% Stock | 1940 |105.5-106.5| | 1,527,000| 1,526,620| 1 April 1 Oct. | 2 Sept.| 3 | Do. 3% Inscribed | 1945 |100.5-101.5| |10,866,900|10,866,900| 1 Jan. 1 July | 2 Dec. | 4 |Queensland Stock Inscribed | 1915-24 | 113 - 115 | | 8,516,734| 8,516,734| " " | " |3 1/2| Do. 3 1/2% Inscribed | 1921-4-30 |105.5-106.5| | 1,250,000| 1,250,000| " " | " |3 1/2| Do. 3 1/2% do. | 1945 |107.5-108.5| | 85,490| 85,480|15 Feb. 15 Aug. | 16 Jan. | 4 |St. Lucia 4% Inscribed Stock | 1919-44 | 112 - 114 | | 7,721,000| 7,721,000| 1 April 1 Oct. | 11 Sept.| 4 |S. Australia (Loans of 1882-3-4-5-6-7) Reg. | 1916-36 | 112 - 114 | | 2,850,713| 2,517,800| 1 Jan. 1 July | 14 Dec. |3 1/2| Do. 3 1/2% Inscribed Stock Registered | 1939 | 111 - 113 | | 839,500| 839,500| " " | " | 3 | Do. 3% do. do. | 1916-26 | 97.5- 98.5| | 3,546,500| 3,546,500| 1 Jan. 1 July | 16 Dec. |3 1/2|Tasmanian 3 1/2% Inscribed Stock | 1920-40 | 106 - 108 | | 1,000,000| 1,000,000| " " | " | 4 | Do. 4% do. | 1920-40 | 114 - 116 | | 100,000| 100,000|15 Mar. 15 Sept.| 17 Aug. | 4 |Trinidad 4% Inscribed Stock | 1917-42 | 114 - 116 | | 3,365,300| 3,365,300| 1 Jan. 1 July | 16 Dec. | 4 |Victoria 4% Railway Loan, 1881, Inscrib. Stock | 1907 | 106 - 108 | | 9,358,200| 9,358,200| 1 April 1 Oct. | 16 Sept.| 4 | Do. Loans of 1882-3-4, Inscrib. Stock |1908-13-19 | 107 - 113 | | 6,000,000| 6,000,000| 1 Jan. 1 July | 16 Dec. | 4 | Do. Loan of 1885, Inscribed Stock | 1920 | 112 - 114 | |12,000,000|12,000,000| " " | " |3 1/2| Do. 3 1/2% Inscribed Stock | 1921-3-6 |104.5-105.5| | 2,107,000| 2,107,000| " " | " | 4 | Do. 4% Inscribed Stock | 1911-26 | 108 - 110 | | 961,277| 961,277|15 Jan. 15 July | 16 Dec. | 4 |Western Australia 4% Inscribed Stock | 1934 | 121 - 123 | | 1,876,000| 1,876,000|15 April 15 Oct. | 2 Oct. | 4 | Do. 4% Inscribed Stock | 1911-31 | 112 - 114 | | 750,000| 750,000| 1 May 1 Nov. | 16 Oct. |3 1/2| Do. 3 1/2% Inscribed Stock | 1915-35 | 110 - 112 | | 750,000| 750,000| " " | " | 3 | Do. 3% Inscribed Stock | 1915-35 | 98 - 99 | | | | | | | | | | ————————————————————————————————————————————————————————————————- The numbered columns are explained as follows:- 1. The amount of Loan authorized to be raised. | 5. The rate of interest on the Loan. 2. The amount actually owing. | 6. The name of the country borrowing. 3. When the interest is payable. | 7. When the Loan is re-payable - thus "1919 or 1944." 4. When ex interest. | 8. The price for every £100 of stock.
Colonial Government Bonds, the other form of investment, are paper or parchment docu- ments, on which are printed all details of the par- ticular loan taken up by the Colony, the nature of the Security the lender has in advancing his money, the rate of interest, and when and how the principal is to be repaid. These bonds are payable to bearer, and pass from hand to hand without any formal transfer, so that as much care is necessary in safe-keeping them, as with bank-notes. Attached to these bonds are little coupons or slips of paper, each one representing a half or quarter year's in- terest, from the date of purchase to the time when the principal is to be paid off. The coupon bears the name of the bank or agency where it may be cashed, and any banker will negotiate it. Of course, only the coupon for the interest actually due on the date indicated on the face must be cut off.
These represent money borrowed by various foreign countries on the security of their credit or solvency, and the loans stand to them in the same relationship as the British Government Funds do to this country. The debts are chiefly repre- sented by bonds, the same as Colonial Govern- ment Bonds, and with coupons attached, which, whether payable in England or their own country, are collected by bankers in the same manner. Such European States as Germany, France, Russia, Denmark, Sweden, and Italy, always enjoy good credit, and they may be con- sidered responsible for their financial engage- ments. In the case of Italy, however, it must be remembered that the Italian income-tax, amounting to 20 per cent., is deducted from the interest, which has also to bear the English income-tax, whatever at the time it may be.
When investing in Colonial or Foreign bonds, especial care is necessary in observing the con- ditions of re-payment. Sometimes it is at the option of the borrower, but usually at a certain specified date. Neglect of this precaution may lead to an investor purchasing at a premium, and sooner than expected being paid off at par.
Some of these loans, too, are paid off by annual instalments, lots being drawn to deter- mine the bonds to be redeemed. If the bonds, therefore, have been bought at a premium, there is always the risk of their being drawn for pay- ment and paid off at par. On the other hand, if the bonds are bought at a discount, there is no danger of loss; and a profit will be realised should they be drawn for payment.
For instance, a £100 bond is purchased at 4 premium, costing £104. If the bond is paid off at par, or £100, there is obviously a loss of £4; but if the bond is purchased at 4 discount, cost- ing £96, it is equally obvious that, if paid off at par, there would be a gain of £4.
Next to the British Government Funds, by far the largest amount of money is invested in Eng- lish railways. First in order of safety, as an investment, is the debenture stock of a railway company. This is the first charge on the rail- way, and holders of the stock are paid the in- terest thereon in priority to all other stocks. In the event of the failure of the company they must also be fully satisfied as to principal and interest before any one else can receive a penny. Any amount of stock, odd or even, may be pur- chased through a banker or broker, and war- rants for the interest are forwarded half-yearly to the address of the registered holder. The debenture stocks of good English railways com- mand a high premium, and the investment, therefore, though undoubtedly safe, does not yield much in the way of interest. Guaran- teed stocks are of various kinds and rank — some on the same level as, and others next in order to, debenture stocks. In some cases the interest is guaranteed by another railway. Before investing in these stocks the nature of the guarantee should be ascertained and its value taken into consideration. Preference stocks and shares come next in rank as an invest- ment. The interest on these is fixed at a cer- tain rate per cent., and, after satisfying the preceding stocks, must be paid in full; or if there is not sufficient profit in the year to pay in full, then as much as means will allow. But any deficiency cannot be carried on to the next year, and so it is lost to the holders.
There are several degrees of Preference stock, some taking precedence of others as to interest; a first preference may be as good as debenture stock, whilst the last preference of the same railway company may be no better than ordinary stock.
Preference stock may be purchased in any amount in the market, and the interest war- rants are sent half-yearly to the registered holders.
Ordinary stocks depend on the profits for the year for the interest they yield, and thus afford a wide field for speculation. The stocks of the great English lines may be relied upon as a good investment, the profits being steady and sufficient to assure a fair amount of interest after satisfying the prior claims of debenture and preference stocks.
Ordinary stock may also be purchased in any amount, and the warrants for interest are sent half-yearly to registered holders of stock.
In all cases railway warrants of every kind will, upon written request to the secretary of the railway company, be forwarded periodically to the bankers of the holder of the stock for the credit of his or her account.
These are a favourite investment with the British public. They consist of Debenture, Guaranteed, and Ordinary stocks. The Deben- ture stocks are similar to those of British rail- ways, and are a first charge on the undertaking. The Guaranteed stocks are those upon which there is an undertaking by the Secretary of State for India that the interest shall not be less at any time than they are stated to bear; any deficiency in the earnings being made up by the Government. Should the earnings be more than sufficient to pay the stated interest, the surplus is divided between the Government and the railway company. Annuities may be purchased in some of these railways, that is to say, by paying, we will assume, £30 as the market price, an annuity of £1 a year will be granted for a certain number of years. In dealing with these it is necessary to ascertain when the annuity ceases, or the investor, hav- ing sunk the capital sum, may cease to receive any income therefrom when least expected.
Warrants for interest on these stocks are periodically sent to registered holders.
The stocks and shares of Canadian and American railways offer a more remunerative return than English railways, as they may be purchased at much lower prices. They are subject, however, to speculative influences of many sorts, and can hardly be recommended for safe permanent investment.
No venture should certainly be made in these stocks without full knowledge of the position and prospects of the railway company and the contingencies to which it may be subject. Any banker would obtain for a customer all the in- formation that could be afforded in regard to these stocks, and indicate their market value as an investment, apart from the fictitious value induced by speculators, and the manoeuvres of syndicates and wire-pullers.
The capital of foreign railways consists of obligations, stocks, and shares. The obligations are in the form of bonds, being a first charge on the railway. The bonds vary in amount, but chiefly represent £100 and £20, and they bear a certain rate of interest. Some of the Conti- nental railways may offer a fair investment in this way, but great care is required in the selection.
The stocks and shares of some of the South American railways command a high premium, but of the whole number quoted in the official list the large majority show a heavy decline on the original value, many indeed being valueless. These stocks are highly speculative and subject to be affected by political convulsions and other contingencies, which make them undesirable as an investment.
A joint-stock bank is composed of a number of proprietors who hold the shares which make up the capital of the bank, and to the nominal amount of these shares their liability is limited.
The whole of this amount, however, is not paid up, but only sufficient for the working re- quirements of the bank, the remainder being held in reserve for contingencies. Let us take, for instance, the London and Westminster Bank, which has the largest capital of all the joint- stock banks.
The capital amounts to £14,000,000, made up of 140,000 shares of £100 each. Only £20 of this £100 is paid up, leaving a liability of £80 on every share.
A joint-stock bank is governed by a board of directors, elected by the shareholders; and managers and other officers are appointed by the board to conduct the business. Many of these banks, besides having a head establish- ment in London, have branches all over the country. Every joint-stock bank is compelled by law to publish its accounts so as to show its position, and these accounts are presented to a yearly or half-yearly meeting of the shareholders for approval.
The British Colonies have a good many joint- stock banks, with agencies in London. By a Permissive Act passed in 1825 the shareholders in most of these are liable for double the amount of their shares.
The profits of banking have been, in times past, very large, and the original shareholders of the older banks have reaped the advantage thereof, but bank shares of good repute are not now to be obtained except at a high premium.
The dividends are sent half-yearly to the ad- dress of the shareholders, and they are not liable to income-tax, as the bank pays this. Any one entitled to exemption from income-tax can claim from the surveyor of taxes the amount the bank has paid in respect of the dividend, on a certifi- cate from the bank to that effect.*
* See Note, p.39.
Individuals of a timorous disposition, if they value their peace of mind, would do well to avoid investing their money in bank shares. There are banks whose position and stability are above suspicion, and which return handsome dividends to their shareholders; but there have been cases of banks, enjoying unlimited confi- dence, which have unexpectedly collapsed and overwhelmed their shareholders in ruin. The nervous person, therefore, who could not read of the collapse of a bank without a fearful appre- hension that his own would be the next to go, had better be content with a smaller rate of in- terest and a tranquil mind therewith. The more sanguine investor who desires a good rate of interest for his money, and has a contempt for contingencies, should at least have some know- ledge of accounts, and be able to form some estimate of the position of a bank from the annual balance-sheet, and should carefully ascertain what immediate contingent liability he would be subject to in the event of collapse.
These represent money borrowed by munici- palities and trusts in Colonial and foreign towns, and the security offered consists of rates and revenues from the various undertakings, such as harbours, gas, and water-works, city improve- ments, &c., in which the loans are invested. The loans are mostly represented by bonds, to which coupons are attached for interest, and are repayable at a certain specified date. Although they do not command the high credit of British Corporation loans, yet some of the Colonial towns are in fair repute as an investment, and the rate of interest is high enough to tempt a large amount of money from this country. Towns of some size in our Colonies, and thoroughly settled, may be relied upon to carry out their obligations, but mushroom cities and foreign places liable to political fluctuations should be looked upon with suspicion.
These offer but a limited area for investment. They were formerly very popular with the British investor, but rival interests and labour troubles have affected the confidence in which they were held, and the ordinary stocks are mostly at a considerable discount.
Gas and electric lighting companies, trams and omnibus companies, telegraphs, telephones, water-works, &c., must all be judged by the localities which they serve and the amount of business they are likely to command. As per- manent investments it should be considered whether they are likely to suffer by supersession or opposition, and if they are managed by a trustworthy competent board of directors.
Among the numerous commercial undertak- ings offering for investment, brewery companies form a class of themselves, and, with few excep- tions, the English companies appear to have done well, and the shares of the best of them stand at a high premium. Properly managed and dealing in an article of universal consump- tion, brewery companies ought to be a trust- worthy investment: but they are liable to much fluctuation. The shares of one of the leading concerns, which now stand at about 150 for the £100 share, were only four years ago as low as 28, and at the same time only half the interest was paid on the preference shares. American brewery companies are liable to be manipulated by cliques and syndicates, and should be avoided as an investment.
Speaking generally, taking shares in this class of property is like purchasing tickets in a lottery in which the prizes are not numerous. It may fairly be said that at least three-quarters of these companies are formed for the purpose of relieving private owners of concerns which were on the verge of failure through some cause or another.
It would be palpably foolish for a man or a firm doing a prosperous business to give it up into other hands, unless such a price could be obtained for it as would be almost ruinous to the purchaser. True it is that in the remaining quarter may be found perfectly legitimate un- dertakings formed into companies, owing to the death of the owner, deficient capital, or some other valid reason. Some of these flourish and take root, others are prosperous for a time and gradually die out. After a time it will be found that few remain which could be recommended for a permanent investment; and much informa- tion has to be sought and acquired before the venture should be made.
There are, of course, many persons who have the means of acquiring reliable information about a company, and are able to form a sound opinion as to its prospects, but the information is derived from personal knowledge and not from kind friends or from public prints, which are not always to be trusted. These persons purchase shares either for investment or as a speculation — in this latter case with a know- ledge or, at all events, a safe presumption that they will go to a premium, that is, rise in value to considerably more than their nominal amount, either from their own merits, or from an active demand for them on the part of the public, or by artificial stimulation. The holders know pretty well when the highest price has been reached, and then sell out with great advantage to them- selves. It is often at that moment that the tyro is recommended to buy, or is seized with a desire to have a share in so good a concern, and parts with his money. The knowing speculator has taken his profit, and sees with grim satisfaction the shares gradually declining in value, until they arrive at the position of more than one- third of existing companies which are now quoted at a discount.
These companies are mostly formed for the purpose of employing their capital in the Colonies, where money commands a higher rate of interest, and can be more profitably employed than in this country.
Some of the older concerns have been suc- cessful, but of the whole number of existing companies at least one-half, judging from the price of their shares, have been failures. The difficulty with these concerns would seem to be the want of direct control, their business having chiefly to be conducted by agents who often consider their own interests before their employers'. Some of these companies appear to have advanced large sums of money on the security of land which they can neither sell nor let, and which has been abandoned by the borrower.
The shares in these trusts were at one time much sought after as an investment. The ostensible business of a trust company is to purchase shares and stocks of other concerns at favourable opportunities, and to invest widely in foreign and other companies offering good dividends, so as to average a high rate of inter- est. They are divided into debenture stock, preferred stock, and deferred stock. The latter has its share of the profits after the others have been satisfied, and at present three-fourths of the companies now doing business have their deferred shares at a discount. The financial collapse in Argentine, some years since, very seriously affected most of these concerns, and it is doubtful, in view of the risky nature of the business, whether they will ever come into favour again.
Under the head of Life, Fire, and Marine Insurance, these companies, as a class, have been more steadily successful than others. Most of these concerns are making large profits, and their shares command a high premium; so high, indeed, that an investment at current prices yields but a moderate rate of interest. The risks undertaken by insurance offices are enor- mous in extent, but the law of average by which they are conducted is so accurate that, taken in the long run, and with sufficient business main- tained, misfortune is almost impossible. In all cases, however, so little is called up of the nominal amount of their shares, that a very large liability attaches to them.
Judging from the prices of the shares in these companies, they have not been very successful as a whole, and it would appear that a Govern- ment subsidy for mail or other service is almost necessary to make them profitable.
Speculation in shares of mining companies has of late years been indulged in to an enor- mous extent, and large fortunes have been made and much money lost. As a rule the prizes have been secured by those behind the scenes, and the public have not had the opportunity of participating until the price of shares had reached a figure which was almost prohibitory. As an investment mining shares, even of the best, are not to be recommended. Mines are apt to get worked out when the source of income fails and there is an end to the concern. More- over, hundreds of companies are promoted which have a specious appearance on the prospectus, and are puffed in every imaginable way, when they have not an ounce of ore or a yard of ground to call their own. Of course, there are genuine undertakings which answer well and yield large profits, but it is extremely difficult to discriminate between the good and the bad, and the best after all are but a speculation.
THE Stock Exchange is a market for the sale and purchase of all kinds of securities. The buildings, wherein business is transacted, occupy a triangular plot of ground near the Bank of England, and comprise the Hall where the various markets are held, and other rooms and offices for the use of the numerous officials. There are 2,500 members, and the management is vested in a Committee selected from their number. Admission to membership is open to any person not engaged in another business, and who is properly proposed and seconded; but very strict regulations and guarantees are enforced before entry, so as to exclude any one whose circumstances and character will not bear the strictest investigation. The hours of busi- ness are eleven to four o'clock on all days except Saturday, when they are until two o'clock. The members of the house are divided into Jobbers and Brokers, the former being dealers in stocks and shares. It is contrary to practice for brokers to deal with brokers, and all trans- actions are between brokers and jobbers.
What are known as "markets" are groups of jobbers distributed about the house, each group having its own particular dealings, one in Government Stocks, another in English rail- ways, a third in Foreign securities, and so on. A broker having received an order from a customer to sell £1,000 Great Eastern Railway Stock, would go to the English railway group and inquire of a jobber the price or quotation for Great Easterns, without disclosing whether he wants to buy or to sell. The jobber replies, "115 1/4 to 115 1/2"; whereupon the broker says, "I sell at 115 1/4," when the bargain is completed, without any memorandum or written contract, the verbal communication being alone in use, and the jobber is bound by it. It will be observed that the lower price, 115 1/4, is accepted by the broker on behalf of his customer, as a sale is always effected at the lowest quotation, and a purchase at the highest. Another broker pre- sently goes to the jobber and asks the same question receiving the same reply, 115 1/4 to 115 1/2 the broker says, "I buy of you at 115 1/2," being the highest quotation. The difference of 5s. between the sale and the purchase is the Job- ber's profit. The broker charges his customer his own commission or brokerage on the trans- action, which ranges from 2s. 6d. per cent. on the Government and Colonial Stocks up to 10s. per cent. on railway stocks. This is the elementary stage of the business of the Stock Exchange, but the variety of the securities dealt in, under constantly changing circumstances, the number of transactions, and the amount of money changing hands, involve intricate accounts and arrangements, which need not be particularised here. Accounts are settled fort- nightly, the precise dates being fixed some time before by the Committee of the house.
Many speculators, however, especially those who have bought stocks and shares with the expectation that they will speedily rise in price, do not find it convenient to pay the purchase- money on the appointed settling day; so pay- ment may, by arrangement, be carried over to the next settling day. For the accommodation a certain charge, which is called "contango," is made, the amount varying with the value of money and the quality of the stock. "Back- wardation," on the other hand, is a commission paid in order to postpone the delivery of stocks or shares which a speculator contracts to sell, but which he never possessed. He is a specu- lator for the fall, hoping by the delay to be able to purchase the same stocks and shares at a less price than he bargained to sell them for, and so make a profit out of the transaction. Specu- lations for a rise are known on the Stock Exchange as "Bulls," and their object is by every manner of means to get the prices of the stocks they are dealing in pushed up as much as possible. Speculators for a fall are called "Bears," and they are equally anxious to send prices down. So sensitive is the stock market that prices are easily affected; the rumoured prospect of an important dividend from a rail- way company will at once probably influence the price of its shares, whilst a report of a disastrous accident will have the contrary effect. A "boom" in the money market is a cheerful desire on the part of the speculative public to be purchasers at advancing prices, and this betokens good business for the brokers and jobbers. A "boom" in any particular stock is a buoyancy in prices, caused by some favourable rumour, whether founded or unfounded, more often the latter, and set agoing in the interest of persons who desire to get rid of surplus stock. A "boom" in railway shares is often brought about by increased traffic receipts; a "boom" in mining shares is caused by one or two com- panies having produced more gold this month than last; and a "boom" in foreign stocks is due to the settlement of some political or other difficulty, &c., &c. A "slump" is just the reverse, being an unaccountable depression which sometimes fastens upon the specula- tive world, and betrays distrust in everything. Unless this feeling is checked in time it degenerates into "panic," when prices fall to a ruinously low figure.
Each fortnightly settlement includes three days — the first being continuation or "con tango" day, when all transactions of a specula- tive description are arranged to be carried over to the next settlement day. The second is the ticket day, when the names of purchasers and sellers are handed over. The third is pay-day when all amounts or balances due for stocks bought or sold are paid or received. The great bulk of business being purely speculative, the first day is the busiest; after noon on that day all new transactions entered into are for settle- ment at the next account day, unless otherwise specially arranged.
Any sums of money may be invested in, or any particular amount of stock purchased of, the Government Funds, through a broker or banker, and there is practically no limit to the quantity that may be held. In the books of the Bank of England an account is opened, and the name, address, and description of the investor care- fully registered. A memorandum is given of the transaction, but it is of value only as such, not being in the nature of a certificate or receipt, and it is not required to be given up or produced in the event of a sale or transfer of the stock or any portion of it. Accounts may be opened in one, two, three, or four names, but not more, and four different accounts may be open at the same time in the same name or names, but they must be distinguished as accounts A, B, C, and D.
In order to sell stock the holder may attend at the Bank of England himself accompanied by his broker, and then and there have the transfer made and the money paid. But this would be unusual and held to imply mistrust, without perhaps occasion for it. The safest plan is for the holder to instruct his bankers to carry out the transaction, and give them a Power of Attorney to enable them to do so. A special form of power is provided by the Bank of Eng- land, the cost of which is 11s. 6d. The Inscribed or Registered Stocks of most of the Colonial Governments are dealt with in the same way, as well as Indian stocks and the stocks of many of our larger towns. The account of an investor may be added to or diminished at any time with- out difficulty or delay.
The stocks and shares of railway and other companies may be purchased through a broker or banker, and the holder passes them over to a buyer by a formal deed of transfer. The purchaser's name, address, and description are carefully registered in the books of the company, and he has then accepted all the responsibilities that may attach to the shares. For instance, the shares he has bought may be only partly paid up. The shares in railway companies are usually paid up in full, but it may so happen in an issue of new shares that they are paid up by periodical instalments; in which case what has already been paid is known as "scrip," and retains that name until developed into fully-paid shares. A company formed of £20 shares may have called up only £5 on each, and with no intention of demanding more, yet the holder is liable for £15 on every share he holds, and before he invests his money he should be careful to ascertain the full extent of his liability. Some little time after the transfer of the stock or shares has been completed, a certificate will be issued by the company, giving full particulars of the holding, and this certificate must be care- fully preserved, as it will be required to be given up before all or any portion of the property can be sold. The Colonial, foreign, and other bonds payable to the bearer, which have been pre- viously described, are purchasable through a broker or banker, and handed over without any transfer or other formality. Bonds of this description should be left in the safe custody of a banker, who would cut off and collect the interest coupons attached, as they became due.
As an example of the hazard incurred by keeping securities of this kind in one's own house, the writer remembers a case where a gentleman was examining in a room of his house, by the light of a candle, some bonds which he afterwards locked up in an iron safe. It was dark outside and the blind was drawn up, so that any one from the garden could see all that was going on in the room. Next morning the empty safe was found in the grounds and the contents had been carried off. All the par- ticulars of the bonds were at once telegraphed to the Stock Exchange, the London banks, and the Police authorities. Some months afterwards the bonds turned up in the hands of a banker in London, who had received them from an agent abroad. An action was brought by the original owner for their recovery, but it was of no avail, as the securities had come into the hands of the banker in the course of regular business, and so the loser could get no redress and, moreover, had to pay a large amount in costs.
The broker, who is a member of the Stock Exchange, from the precautions taken on his admission, should be a responsible person, whom it would be safe to entrust with any business which might be put into his hands. His deal- ings, however, are chiefly on behalf of the bankers and outside brokers, acting for them- selves and the public. There are numerous outside brokers (that is, brokers who are not members of the Stock Exchange) in London and all over the country. In every profession there are some doubtful members, and stock- broking has its fair share, but with ordinary vigilance on the part of their customers, well- established brokers will carry out their com- missions faithfully and reasonably. As to the advice, however, a broker may have to offer in the way of investments, it must be remembered that he is no more than mortal, and would at times be prone to submit such securities as he him- self, on behalf of a client, would most desire to dispose of. In this way, too, the country broker is liable to be pressed by his London agent to get rid of particular stocks or shares which hang heavy on hand. However, bearing this well in mind, an investor may gain much useful infor- mation from his broker, although for sound advice his banker is to be preferred.
Members of the Stock Exchange are not allowed to advertise themselves or their firms, but most of the daily newspapers in London have an agent in the house, either a jobber or broker, who furnishes to his principal for publi- cation a daily report of the state of the markets and the current prices of the day, which in that way reach the eye of the public. It may be assumed that in the better class of journals the information thus afforded is perfectly trust- worthy, although some years since one of the leading newspapers was imposed upon by its agent, who took advantage of his position to manipulate certain matters for his own ends. Less scrupulous publications, however, are freely made use of to influence the public, to cry up or prejudice the markets and particular concerns. The provincial broker, as a rule, limits his ad- vertisement to the name and address of his firm, with a quotation of the prices of a few of the stocks mostly dealt in, and monthly, or quar- terly, sends an extended list to his customers. The outside broker who advertises himself freely in the newspapers, as well as by pamphlets and circulars, is to be avoided. He will invite you to participate in his system — always an in- fallible one — of operating. He will suggest "options," "put and call," the "cover" system, and other devices by which the inexperienced may be mystified and beguiled into losing their money. However astute a man may consider himself, experience proves that, with amateurs, this kind of gambling is sure to result in loss.
An ingenious mode of practising on the cre- dulity of the public may be noticed in some financial publications. An editorial notice or subsidised paragraph will be inserted in the paper, extolling the merits and predicting the certain success of some concern which it is desired to bolster up or to foist upon the public. This is done in such a way that the reader is expected to believe that it is the genuine ex- pression of a truthful opinion by the editor, who has obtained his information from unimpeach- able sources. Of course, this peculiar kind of advertisement has to be paid for, but it has its advantages to the advertiser, for it can (for a consideration) be quoted by the country papers as unbiassed news, and attention called to it in a money article or leaderette. The pamphlets issued by the advertising outside broker are sometimes amusingly artless in the endeavour to sell shares and attract custom. On the first page will be found some paragraphs setting forth the merits and prospects of certain named companies, and advising the reader to buy shares in them without a day's delay, as a con- siderable and speedy rise in value is assured. One may be permitted to wonder why the broker and all his friends do not rush in and secure every share that is to be had. At the end of the paper the reason will be discovered; in every one of the concerns referred to shares are offered for sale, which cannot be got rid of in the regular market. It must be inferred that some credulous persons are taken in by this transparent artifice, or it would not be so con- stantly practised. The object of these publica- tions is chiefly to puff up doubtful securities, in the hope that some fatuous speculator may be tempted to buy. It is delightful when two of these gentry fall out and expose each other's knavery. The reader is assured that "Codlin's his friend, not Short"; the latter is denounced as a fraud and retaliates, but no action for libel is brought, because both know that on either side the imputation is justifiable.
It may excite surprise in some who are favoured with circulars and prospectuses which are, through the Post Office, sown broadcast over the whole country, how the name and address of a comparatively obscure individual should be known. Prospectus and circular distributing is a business conducted on a regular system. When it is desired to invite subscrip- tions to float some new company or to bolster up some concern, the share lists of the same sort of companies already in existence are drawn upon for names and addresses; and court directories also furnish a wide field for operations.
At the present time the rage appears to have set in for forming limited liability companies out of private industrial concerns or trading firms. Most of these companies, we are told by an authority, "are brought out under the same auspices" — that is they are started and floated by a skilled personage known as a "promoter." The stereotyped prospectus must now be familiar to most people, and the public respond freely to the invitation to subscribe for shares, without consideration or inquiry. The prospectus is usually replete with statistics, showing the suc- cess which has attended the business whilst in private hands, and the enormous profits made; and one is apt to wonder why they did not keep it to themselves, instead of inviting the public to share in the gains. But there are good com- panies and bad companies, and it is to be feared that the latter largely preponderate. A good company may have a genuine reason for its existence, such as the desire of a last surviving partner to retire from active life, or the growth of the business to such an extent that more capital is required than could be obtained from a private person, or upon some other equally valid ground. A bad company is often the make-shift to save a decaying firm from insol- vency, or to dispose of a business at a price quite out of proportion to its real value. The prospectus affords no opportunity of discrimi- nating what is genuine and likely to succeed from what is false and sure to fail. If, as it has been said, eighty per cent. of companies floated sooner or later go to the wall, then, indeed, inquiry and much circumspection are needed before entering upon a speculation of the kind. It must be said, however, that many companies formed from trading concerns have become well established and profitable, and if permanency could be relied upon, they furnish a field for lucrative investments. Those adventures which are unduly pressed upon the notice of the public should be regarded with suspicion. If a thing is really good in itself, it will not require much persuasion to commend itself; and if bad, no purchased laudation will make it better. A subtle mode of advertising is just now coming into vogue, which, though expensive, will for a time be successful. There need be no reflection on the companies which adopt it, though calcu- lated to beguile the innocent and confiding in- vestor. A leaf or two introduced in some of our illustrated papers, in no wise differing in the printing from the remainder of the publica- tion, and appearing as though it formed part of the regular pabulum offered to the public. This leaf or leaves contain well-executed pic- tures of the works and machinery and other interesting objects connected with the industry of a company to which it is desired to call attention, and a descriptive account is given of its magnitude and success. To the casual reader all this would appear to be a matter of public interest, offered to the public as part of the regular business of the paper, but it is only an ingenious form of advertisement and has to be paid for as such, but that is of no consequence if the effect is produced, of a rise in the price of the shares. There are some companies whose shares are quoted at such enormous premiums, and which pay such high dividends, that the investor is sorely tempted to embark in similar undertakings, apparently, that are brought be- fore the public. But these prosperous concerns are in most cases first taken up by a syndicate — that is, a certain limited number of persons behind the scenes — who finance and float the company, and when success has been attained, the public are granted the privilege of purchas- ing shares — but at such a price as the syndicate choses to put upon them, and, not seldom, that is the highest they ever attain. This is particu- larly the case with mining companies, the successful ones having certainly only benefited the few. This syndicate system has given rise to a bogus imitation, which, however, appears to have met with but limited success. Circulars in lithographed writing, marked "private and con- fidential," and implying a friendly interest in those addressed, are sent to persons whose names are obtained in the manner already indi- cated. An invitation is given them to join a syndicate about to be formed to float a certain company, the profits arising from the operation being certain and enormous. Again, if it be such an excellent and certain venture, why offer a share to an entire stranger? These circulars are very speciously worded, and there is an air of candour about them likely to allure. Anyone foolish enough to subscribe would probably, after an interval, be informed that owing to un- foreseen circumstances the adventure had turned out a failure, and that all the money had gone in expenses. Successful gold mines have yielded large fortunes to their proprietors, but it must be remembered that mines have but a limited existence, and once they are worked out the money invested in them is lost; for when they cease to yield ore there is nothing more to be obtained from them. Promiscuous dealing in mine shares is nothing more or less than gambling, or taking part in a lottery in which the blanks are overwhelming and the prizes next to nothing. If an enterprise has in it any degree of soundness or promise, there are plenty of the knowing ones ready to step in and take all the advantages to be gained; it is the des- perate ventures and unscrupulous swindles that the public are mostly pressed to support — only to lose their money. It is to be hoped that the dupes are at length awake to the pit-falls dug for them by the mining company promoter and speculator, whose seductive paragraphs are everywhere in evidence in the advertising sheets of the day.
A typical example — and not a fictitious one — of hundreds of knavish concerns foisted on the public may be quoted. A certain company, of which no prospectus has been issued, nor of which anything is publicly known, appears in the mining lists. One day, a paragraph in a financial paper reports that the agent for the mines, on the spot, has cabled that the promise of success exceeds all expectations, that samples of ore, yielding three ounces to the ton, have been found, and that the necessary machinery must be sent out at once. This is followed up by an editorial leaderette (of course, paid for), in which the writer expresses surprise that the shares of so promising an enterprise should be at so low a price, and predicting a rapid advance when the work is further developed. These notices effect their purpose to the extent of rais- ing the quotations of the shares a few shillings, but this is not enough for the promoter; a cir- cular is next issued, in the usual way, to the effect that the directors have been fortunate enough to secure additional property near their own, which furnishes wood and water, so essential to the proper development of the mine, and including, moreover, alluvial pits abounding in gold. An elaborate lithographed sketch of the property, with mines at work and a steam-engine, accom- panies the circular, and the whole presents an appearance of real business. The next move is the statutory meeting of the shareholders, which, however, is very sparsely attended, as the vic- tims are chiefly people residing in the country, who do not care to incur the expense of a journey to London. The man who presides at the meet- ing, an outside broker, begins a speech by apologising for the absence of the chairman of the company (of whom the shareholders hear for the first time), and then goes on to describe with tedious detail the technical working of the mine, the stopes and veins, and bunches of gold that there are, and the stamps, machinery, &c., that there are to be. He describes what has been done in the alluvial pits, and the prospect of wealth to be drawn therefrom as beyond the dreams of avarice, and winds up with warm con- gratulation of the proprietors on the valuable property they possess. Whether he has over- done his part or something prejudicial to the company leaks out, the shares which had changed hands at 10s. gradually drop to 5s. Then a circular goes the round in which some member of the ring of knaves invites the public to join a syndicate to buy up five thousand of these shares which he has, through peculiar circum- stances, been able to secure the refusal of at 4s. a share. A special meeting of the shareholders is next called, when it is announced that more capital is required, and that it will be necessary to pay up the one shilling per share which still remains outstanding. A last desperate effort to get rid of the shares at any price is then resorted to before the call of one shilling per share becomes payable, and some thousands are offered at one shilling and sixpence each. After the time has expired for paying the call, a last circular is issued, intimating briefly that the eminent engineer, who has originally given such a glowing account of the mine, now reports that there is no present indication of gold on the property, but that possibly some might be found if they dug deep enough!
The name of the company has disappeared from the mining share list, and it will be heard of no more. It is doubtful if there ever was any property, or engineer, or board of directors, or, in fact, anything more than the outside broker and his confederates.
Of the bona fide speculative undertakings in South Africa and Australia, the exploration and finance companies, or some few of them, have made the largest profits. Their system, broadly speaking, is to acquire certain tracts of land in a gold-bearing district, and then let small portions on lease to different subsidiary companies, which have been floated to develop gold or whatever else these portions may con- tain. The price paid to the parent company is made up of; perhaps, one half in cash and the other in the shares of the new concern. An im- mediate profit accrues from the payment in cash, and there is a wide field for further gains if the operations of the subsidiary companies are suc- cessful. But in this, as in all speculative enter- prises, the prizes have been few and the blanks many.