of investment companies doing
business under pretentious names and offering mortgage investments at
interest rates which by the local conditions are impossible. One of
the devices of these enterprising companies is to offer their own
guarantees as to both principal and interest of all mortgages
negotiated by them. The investor should be sure of two things: (1) The
safety of the principal, and (2) regularity in the payment of the
interest. There is great danger of default from causes not anticipated
by the mortgagor and over which he has no control.

STOCKS AS SECURITIES

To make a profitable investment in stocks the buyer must anticipate
the future. A mill that may be working day and night this year may be
obliged to shut down entirely next year. A business which is open to
public competition must take its chances on its future success. The
greater the earnings, the more certain the competition. Many
corporations owning monopolies by virtue of patent rights have made
large fortunes, but there is always the possibility of new discovery.
Electricity has succeeded gas; the telephone is competing with the
telegraph; the trolley is cutting into the profits of railways. A good
thing in stocks to-day does not necessarily mean a good thing next
year. Railroad stocks are of such varied character that it is
impossible here to make more than general statements. Many of our
railroad stocks bring prices far above par and pay liberal interest on
investments. Some of them are so profitable that they are really not
on the market and cannot easily be bought. Others represent roads
loaded down with mortgages and other obligations so heavy as to make
the stock really a liability rather than a resource to its owner. The
stock quotations represent in a general way the comparative value of
these securities. Of recent stock electric-railway stock is the most
popular and in many instances the most profitable. The introduction of
electric power has reduced the working expense one half and in most
instances has doubled the traffic without any reduction in fares. The
buyer should make sure that the road is in a busy community able to
sustain it, that its franchise will protect it from dangerous
competition, and that the securities have been legally issued.

SUBSTITUTION SECURITIES

There have recently been formed several large companies whose business
it is to issue bonds on the security of other bonds. The idea is
similar to that of real-e