pure and simple, is comparatively little. You
know that in the long run, even with the most ably managed companies,
expenses and losses together just about eat up all the premiums
received--that less than a dozen first-class companies doing a national
business have an underwriting balance on the right side for the last
ten-year period."

"I admit that unfortunately such is the case."

"Therefore the only chance a company has to make money is from the use
of money--from the use of its premiums between the time they are
received and the time they are paid out in losses. And as this is
really our only chance, we ought to take every advantage--and make as
much of an investment profit as we possibly can."

"I trust you do not mean to suggest that we use the Guardian's assets
for purposes of speculation," Mr. Wintermuth remarked.

"Certainly not--unless it is speculating to take advantage of what
foresight and knowledge of conditions our finance committee possesses.
I do not suggest buying on margin or selling what we haven't got. But
I do suggest that we carry more liquid assets and a bigger cash balance
than we have ever done, so as to be able to take advantage of
opportunities that may present themselves. Now, take our Ninth
National Bank stock, for instance. The Duane Trust Company crowd are
trying to buy the control, and the stock's higher than it's ever been.
In my opinion the block we hold is worth more to the Duane people than
it is to us; I'd let them have it."

"Why, we've had that stock for twenty years!" the President said.

"Well, we've probably had it long enough," said his subordinate, with a
smile. "At least I'd like to have Mr. Griswold's opinion on the point.
And you certainly will never lose much by getting out of a security at
the highest price it's touched in that entire period."

"Perhaps not. I will speak to Griswold about it," said Mr. Wintermuth.

"I am not a financier, and all this is somewhat outside my province,"
Smith went on; "but I think we ought to follow more closely the trend
of modern business methods. We hold far more than we need of solid
railroad bonds that net us four per cent on our investment. With very
little extra risk I am sure we can secure a good deal larger return."

It was a rather daring speech to make, for four per cent first-mortgage
railroad bonds had been Mr. Wintermuth's idea of finance for almost a
generation. It spoke well for his confidence in his Vic